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Full text of "1977 Recommendations and Reports, Volume 1"

Digitized by the Internet Archive 

in 2010 with funding from 

Public.Resource.org and Law.Gov 



http://www.archive.org/details/adminconf196870unse 



RICHARD K. BKRG 

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Recommendations and Reports 

of the ADMINISTRATIVE 

CONFERENCE 

OF THE 

UNITED STATES 

JANUARY 8, 1968-JUNE 30, 1970 
VOLUME 




726 Jackson Place - Washinston, D.C. 20506 



COUNCIL MEMBERS 



JERRE S. WILLIAMS 
Chairman 

FRANK M. WOZENCRAFT, V ice-Chairman, lawyer, Houston, Tex. Former 
Assistant Attorney General, Department of Justice. 

WILLARD DEASON, Commissioner, Interstate Commerce Commission. 

WALTER GELLHORN, Betts Professor of Law, Columbia University 
School of Law, New York, N.Y. Former Director, Attorney General's 
Committee on Administrative Procedure. 

ROSEL H. HYDE, lawyer, Washington, D.C. Former Chairman, Federal 
Communications Commission. 

JOE M. KILGORE, lawyer, Austin, Tex. Former member of Congress. 

LEONARD H. MARKS, lawyer, Washington, D.C. Former Director, U.S. In- 
formation Agency. 

EDWARD L. MORGAN, Deputy Counsel to the President. 

HAROLD L. RUSSELL, lawyer, Atlanta, Ga. Former Chairman, Adminis- 
trative Law Section, American Bar Association. 

WHITNEY NORTH SEYMOUR, Sr., lawyer. New York, N.Y. Former Pres- 
ident, American Bar Association. 

RICHARD C. VAN DUSEN, Under Secretary, Department of Housing and 
Urban Development. 



FORMER MEMBERS OF THE COUNCIL 

Manuel F. Cohen, lawyer, Washington, D.C. Former Chairman, Securities 
and Exchange Commission. 

William W. Golub, lawyer, New York, N.Y. 

Frank Pace, Jr., President and Chief Executive Officer, International Execu- 
tive Service Corporation, New York, N.Y. 



For sale by the Superintendent of Documents, U.S. Government Printing Office 
Washington, D.C. 20402 - Price $4.50 



FOREWORD 



This is the first in a series of Reports that will publish the 
official Recommendations of the Administrative Conference of the 
United States, the research Reports in support thereof, and other 
important Conference documents. 

The period January 8, 1968, when the Conference was first 
activated, through June 30, 1970, is covered in this volume 
During this time, four Plenary Sessions were held and 22 official 
recommendations were adopted. This volume prints all official 
documents and the names of all persons who have served as mem- 
bers of the Conference during this period. The Appendix includes 
the enabling statute, the bylaws, and a list of all participating 
agencies, including an opinion determining those agencies to 
have statutory membership and those designated for membership 
by the President. 

The 1969 Annual Report of the Administrative Conference 
contains a detailed discussion of its methods of operation and 
activities through December 31, 1969. 



ill 



STAFF OF THE 
ADMINISTRATIVE CONFERENCE 



John F. Cushman 
Executive Director 

Emory N. Ellis, Jr.* 
Executive Secretary 

David E. Kartalia 

Staff Attorney 

Margie W. Barnes 

Executive Assistant 

Ruth M. Hartman 
Secretary 

William L. Banks 
Clerk 

Connie Foley 
Clerk-Typist 



*Succeeded Webster P. Maxon who resigned October 4, 1969 to become Executive Director. 
Federal Power Commission. 



IV 



CONTENTS 



Introduction 

Members of the Conference 



Recommendation 
Recommendation 



Recommendation 
Recommendation 



2: 



Recommendation 6 



Official Recommendations of the Administrative Con- 
ference OF THE United States 

Recommendation 1: Adequate Hearing Facilities . - 

U.S. Government Organization 
Manual 

Parallel Table of Statutory Au- 
thorities and Rules (2 CFR 
ch. 1) 

Consumer Bulletin . -- 

Representation of the Poor in 
Agency Rulemaking of Direct 
Consequence to Them 

Delegation of Final Decisional 
Authority Subject to Dis- 
cretionary Review by the 

Agency 

Recommendation 7: Elimination of Jurisdictional 

Amount Requirement in Judi- 
cial Review 

Judicial Review of Interstate 
Commerce Commission Or- 
ders -_ 

Statutory Reform of the Sov- 
ereign Immunity Doctrine 

Judicial Enforcement of Orders 
of the National Labor Re- 
lations Board 

Publication of a "Guide to 
Federal Reporting Require- 
ments 

Analytical Subject-Indexes to 
Selected Volumes of the Code 

of Federal Regulations 

Recommendation 13: Elimination of Duplicative 

Hearings in FAA Safety De- 
certification Cases 



Recommendation 8: 

Recommendation 9: 

Recommendation 10: 

Recommendation 11: 

Recommendation 12: 



Page 
1 

3 



9 
9 

11 



11 
12 



13 

20 
22 

23 

23 

24 
24 
25 
25 

V 



VI 



ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 



Page 

Recommendation 14: Compilation of Statistics on Ad- 
ministrative Proceedings by 
Federal Departments and 
Agencies 26 

Recommendation 15: Consideration of Alternatives 

in Licensing Procedures 28 

Recommendation 16: Elimination of Certain Exemp- 
tions from the APA Rulemak- 
ing Requirements 29 

Recommendation 17: Recruitment and Selection of 

Hearing Examiners ; Continu- 
ing Training for Government 
Attorneys and Hearing Ex- 
aminers; Creation of a Cen- 
ter for Continuing Legal Ed- 
ucation in Government 30 

Recommendation 18: Parties Defendant 32 

Recommendation 19: SEC No- Action Letters Under 

Section 4 of the Securities 
Act of 1933 34 

Recommendation 20: Summary Decision in Agency 

Adjudication 36 

Recommendation 21 : Discovery in Agency Adjudica- 
tion 37 

Recommendation 22: Practices and Procedures Under 

the Renegotiation Act of 
1951 43 

Texts of Committee Reports in Support of Recommen- 
dations Nos. 1-22 45 

Recommendation 1 45 

Recommendation 2 58 

Recommendation 3 62 

Recommendation 4 66 

Recommendation 5 71 

Recommendation 6 122 

Recommendation 7 169 

Recommendation 8 181 

Recommendation 9 190 

Recommendation 10 237 

Recommendation 11 268 

Recommendation 12 271 

Recommendation 13 273 



CONTENTS 



Recommendation 14 
Recommendation 15 
Recommendation 16 
Recommendation 17 
Recommendation 18 
Recommendation 19 
Recommendation 20 
Recommendation 21 
Recommendation 22 



ADDITIONAL REPORTS OF THE ADMINSTRATIVE CONFERENCE 

OF THE United States .~'lu 

Remission and Mitigation of Forfeitures in the 
Justice Department 



Vll 
Page 

284 
297 
305 
378 
415 
437 
543 
571 
663 



696 
697 
761 



Appendixes „^^ 

Administrative Conference Act ' ^^ 

^, 7d5 

Bylaws ' ' „^q 

Composition of the Administrative Conference /b» 

Opinion Defining Independent Boards and Agencies _ _ 770 

Presidential Designation of Agencies ^^^ 



INTRODUCTION 



The Administrative Conference of the United States was es- 
tablished as a permanent, independent Federal agency m 1968. 
It is a sizable deliberative body composed of top-level Govern- 
ment officials and persons of national reputation m admmistra- 
tive law drawn on a part-time basis from private life. Its mission 
is to develop improvements in the Federal administrative proc- 
ess-that vast complex of formal and informal legal machinery 
which the Federal agencies use to carry out national policies and 
to determine the rights, privileges, and obligations of individual 
citizens and private businesses. The Conference is supported by 
a small permanent staff and by a number of legal scholars em- 
ployed on a temporary basis, consisting mostly of professors of 
administrative law. 

The Act provides that the Administrative Conference shall 
consist of not more than 91 nor less than 75 members, of whom 
not more than 36 may be appointed from the private sector^ The 
Conference at present consists of 82 members: 11 Council Mem- 
bers (including the Chairman), 39 members from 33 Govern- 
ment agencies, and 32 from the private sector. 

The Chairman is appointed by the President for a five-year 
term, with Senate confirmation. He is the only member who 
serves on a full-time, compensated basis. All other members, in- 
cluding the members of the Council of the Conference, the gov- 
erning board appointed by the President, contribute their 
knowledge, experience, and services without compensation. 

Some thirty departments and agencies conduct the bulk of ad- 
ministrative procedures affecting private rights. There is infinite 
variety to such proceedings. They range from the grant ot a 
television license worth millions of dollars to the processing of 
applications for amateur or citizen band licenses; from the 
processing of an application to merge railroads of the magnitude 
of the New York Central and the Pennsylvania to authorizing 
truck transportation of a particular commodity over a particular 
route; or from the approval of a prospectus for a major new 
corporation to permitting cattle to graze on federal lands. Be- 
cause of this steady flow of Federal agency determinations af- 
fecting our natural resources, transportation, power, finance. 



2 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

communications, commerce, securities, taxation, labor, credit, 
advertising-, housing-, veterans' benefits, the supply, quality, and 
price of food and fibers, public health, immigration, social wel- 
fare programs, drug control, and countless other areas of ac- 
tivity, the administrative process, in one way or another, con- 
tinuously exerts its influence upon every citizen in his personal 
and business affairs. All citizens are vitally interested in how 
efficiently these agencies operate. The public seeks and is entitled 
to fair and expeditious action at minimum cost. 

The statute grants to the Administrative Conference only the 
power to make recommendations. Full responsibility for the 
proper performance of agency functions remains with the agency 
heads. However, because officials from all of the major agencies 
are included in its membership, and because of the prestige of 
the total membership, it is contemplated that official recommen- 
dations of the Administrative Conference will be adopted in most 
instances where they are applicable. In addition, the Chairman 
is required by the Act to assist the agencies in putting recom- 
mendations into effect and to report at least once a year to 
Congress and to the President the recommendations made by 
the Conference and the extent of their implementation by the 
agencies. 

In 1952 Mr. Justice Jackson observed: "The rise of adminis- 
trative bodies probably has been the most significant legal trend 
of the last century . . . Perhaps more values today are affected 
by their decisions than by those of all the courts." 

The publication of the official recommendations and reports of 
the Administrative Conference is designed to inform the public 
of proposed changes in agency procedures to make them fairer, 
less costly, and more expeditious. It is also the expectation of the 
Conference that such publication will stimulate the agencies and 
the public to continue to seek improvements in the procedures 
which are necessary to make our government work. 

Jerre S. Williams, 
Chairman. 



MEMBERS OF THE CONFERENCE 
(June 30, 1970) 



Carolyn E. Agger, lawyer, Washin^on, D.C. Former attorney, Department 
of the Treasury, National Labor Relations Board. 

C. Paul Barker, lawyer, New Orleans, La. Former attorney, National Labor 
Relations Board. 

St. John Barrett, Deputy General Counsel, Department of Health, Educa- 
tion, and Welfare. 

Frank A. Bartimo, Assistant General Counsel, Department of Defense. 

Charles F. Brannan, General Counsel, National Farmers Union, Denver, 
Colo. Former Secretary of Agriculture. 

William H. Brown, III, Chairman. Equal Employment Opportunity Com- 
mission. 

Charles W. Bucy, Assistant General Counsel. Department of Agriculture. 

J. W. Bullion, lawyer, Dallas, Tex. Former attorney, Bureau of Internal 
Revenue, Department of the Treasury. 

Clark Byse, Professor of Law, Harvard Law School, Cambridge, Mass. 
Former attorney. Department of Commerce, Securities and Exchange 
Commission. 

John T. Chadwell, lawyer, Chicago, 111. Authority on trade regulations and 
antitrust law. Active in Antitrust Committee, American Bar Association. 

Harold J. Cohen, General Attorney, American Telephone & Telegraph Co., 
New York, N.Y. Former Chief, Common Carrier Bureau, Federal Commu- 
nications Commission. 

Donald C. Cook, President, American Electric Power Co., Inc., New York, 
N.Y. Lawyer and former member of Securities and Exchange Commission. 

Arthur H. Courshon, chairman of board, Washington Federal Savings & 
Loan Association of Miami Beach, Miami Beach, Fla. Lawyer and former 
member of task force, Federal Home Loan Bank Board. 

William J. Curtin, lawyer, Washington, D.C. Active in airline and trucking 
labor disputes. 

Kenneth Gulp Davis, John P. Wilson Professor of Law. University of Chi- 
cago Law School, Chicago. 111. Author of treatise on administrative law. 

Philip Elman, Commissioner, Federal Trade Commission. 

Norman A. Flaningam, lawyer, Washington, D.C. Chairman, Committee on 
Practice and Procedure, Federal Power Bar Association. 

Thomas J. Flavin, Judicial Officer, Department of Agriculture. 



4 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

Jefferson B. Fordham, Dean, University of Pennsylvania Law School, Phil- 
adelphia, Pa. 

Warner W. Gardner, lawyer, Washington, D.C. Former Assistant Secretary 
of Interior. Served also as Solicitor, Department of Labor, and as Solicitor, 
Department of the Interior. 

William T. Gennetti, Deputy General Counsel, Small Business Administra- 
tion. 

Whitney Gillilland, Board Member, Civil Aeronautics Board, 

Howard A. Glickstein, Staff Director, Commission on Civil Rights. 

George A. Graham, Executive Director, National Academy of Public Admin- 
istration, Washington, D.C. Former consultant. Hoover Commission; Direc- 
tor of Government Studies, Brookings Institution. 

Robert W. Graham, lawyer, Seattle, Wash. Former member. Attorney Gen- 
eral's Committee to Study Antitrust Laws. 

Dale W. Hardin, Commissioner, Interstate Commerce Commission. 

Patrica Harris, lawyer, Washington, D.C. Former Professor of Law and 
Dean of Howard Law School. Served also as Ambassador to Luxembourg. 

Ferrel Heady, President, University of New Mexico, Albuquerque, N. Mex. 

George H. Hearn, Commissioner, Federal Maritime Commission. 

Arthur E. Hess, Deputy Commissioner, Social Security Administration. 

S. Neil Hosenball, Deputy General Counsel, National Aeronautics and 
Space Administration. 

Richard H. Keatinge, lawyer, Los Angeles, Calif. Former chairman. Admin- 
istrative Law Section, American Bar Association. 

John T. Koehler, lawyer, Washington, D.C. Former Assistant Secretary of 
Navy. Served also as Chairman, Maritime Administration, and as Chair- 
man, Renegotiation Board. 

Jim C. Langdon, Chairman, Texas Railroad Commission. Austin, Tex. 
Former Chief Judge, Court of Civil Appeals, El Paso, Tex. 

Arthur W. Leibold, Jr., General Counsel, Federal Home Loan Bank Board. 

Sol Lindenbaum, Executive Assistant to the Attorney General, Department 
of Justice. 

Charlotte Tuttle Lloyd, Assistant General Counsel, Department of the 
Treasury. 

Phillip A. Loomis, Jr., General Counsel, Securities and Exchange Commis- 
sion. 

J. Edward Lyerly, Deputy Legal Adviser for Administration, Department of 
State. 

Ross L. Malone, Vice President and General Counsel, General Motors Corp., 
New York, N.Y. Former President of the American Bar Association. 



MEMBERS 5 

Hart T. Mankin, General Counsel, General Services Administration. 

Malcolm Mason, Associate General Counsel, Office of Economic Opportunity. 

Wilson Matthews, Director, Hearing Examiners Office, Civil Service Com- 
mission. 

Mitchell Melich, Solicitor, Department of the Interior. 

Edward B. Miller, Chairman, National Labor Relations Board. 

James B. Minor, Assistant General Counsel for Regulation, Department of 
Transportation. 

John N. Nassikas, Chairman, Federal Power Commission. 

Nathaniel L. Nathanson, Professor of Law, Northwestern University, 
Chicago, 111. Former Associate General Counsel, Office of Price Administra- 
tion. 

C. Roger Nelson, lawyer, Washington, D.C. Former Chairman, Administra- 
tive Law Section, American Bar Association. 

David A. Nelson, General Counsel, Post Office Department. 

Lenoard Niederlehner, Acting General Counsel, Department of Defense. 

Thomas J. O'Connell, Deputy General Reserve System. 

Nathan Ostroff, Chairman, Appeals Board, Department of Commerce. 

Max D. Paglin, Executive Director, Federal Communications Commission. 

Samuel R. Pierce, Jr., lawyer. New York, N.Y. Former judge. Court of Gen- 
eral Sessions, New York. Served also as Assistant to Under Secretary of 
Labor. 

Edwin F. Rains, Deputy Commissioner of Customs, Department of the 
Treasury. 

James T. Ramey, Commissioner, Atomic Energy Commission. 

Emmette S. Redford, Ashbel Smith Professor of Government, University of 
Texas, Austin, Tex. Former advisor. Office of Price Administration, Presi- 
dent's Committee on Government Organization and Bureau of the Budget. 

Fred B. Rhodes, Deputy Administrator of Veterans Affairs, Veterans Ad- 
ministration. 

Charles S. Rhyne, lawyer, Washington, D.C. Former President, American 
Bar Association. 

Merritt Ruhlen, Hearing Examiner, Civil Aeronautics Board. 

Howard Schnoor, Director, Government Organization Staff, Office of Execu- 
tive Management, Bureau of the Budget. 

Bernard G. Segal, lawyer, Philadelphia, Pa. President, American Bar Asso- 
ciation. 

Ashley Sellers, lawyer, Washington, D.C. Former Chairman, Administrative 
Law Section, American Bar Association. 



6 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

Laurence H. Silberman, Solicitor, Department of Labor. 

Curtis W. Tarr, Director, Selective Service System. 

Earl J. Thomas, Director, Office of Inspection, Department of Interior. 

Starr Thomas, Vice President — law, Santa Fe Railw^ay, Chicago, 111. Former 
President, Association of Interstate Commerce Commission Practitioners. 

Sherman Unger, General Counsel, Department of Housing and Urban De- 
velopment. 

Thomas H. Wall, lawyer, Washington, D.C. Former attorney, Federal Com- 
munications Commission. 

Howard Westwood, lawyer, Washington, D.C. Active in Administrative 
Law and Legal Aid. 



Former Conference Members with Positions 
ot Time of Membership 

Robert C. Cassidy, Assistant Director for Administration, Office of Economic 
Opportunity. 

John H. Crooker, Jr., Chairman, Civil Aeronautics Board. 

Paul Rand Dixon, member and former Chairman, Federal Trade Commis- 
sion. 

Charles Donahue, Solicitor of Labor, Department of Labor. 

David C. Eberhart, Director of the Federal Register, General Services Ad- 
ministration. 

Robert P. Forrest al, Assistant Secretary, Federal Reserve System. 

Bernard A. Foster, Jr., lawyer, Washington, D.C. Former attorney. Federal 
Power Commission, Federal Trade Commission. Deceased. 

John Harllee (Rear Adm., USN, Retired), Chairman, Federal Maritime 
Commission. 

Lewis B. Hershey (General), Director, Selective Service System. 

John W. Kopecky, Deputy Associate General Counsel, Department of Hous- 
ing and Urban Development. 

Frank W. McCulloch, Chairman, National Labor Relations Board. 

Timothy J. May, General Counsel, Post Office Department. 

Alan J. Moscov, General Counsel, Federal Home Loan Bank Board. 

George Robinson, Deputy Assistant Secretary for Administration, Depart- 
ment of the Interior. 

William P. Rogers, lawyer, Washington, D.C. Former Attorney General of 
the United States. Resigned when appointed Secretary of State. 



MEMBERS ' 

Fred B. Smith, General Counsel, Department of the Treasury. 

Daniel Steiner, General Counsel, Equal Employment Opportunity Commis- 
sion. 

A. W. Stratton, Deputy Administrator of Veterans Affairs, Veterans Ad- 
ministration. 

William L. Taylor, Staff Director, Commission on Civil Rights. 

Edward Weinberg, Solicitor, Department of the Interior. 

W. Edwin Youngblood, Hearing Examiner, National Labor Relations 
Board. 

Lee C. White, Chairman, Federal Power Commission. 

Philip F. Zeidman, General Counsel, Small Business Administration. 



OFFICIAL RECOMMENDATIONS OF THE 

ADMINISTRATIVE CONFERENCE 

OF THE UNITED STATES-AS OF JUNE 30, 1970 



RECOMMENDATION NO. 1 
ADEQUATE HEARING FACILITIES ' 

Administrative hearings of the Federal Government should be 
conducted in dignified, efficient hearing rooms, appropriate as to 
size, arrangement, and furnishings. At the present time no cen- 
tral body is responsible for providing or planning the needed 
facilities. As a particular consequence, administrative hearings 
often have been conducted in surroundings unsuitable to the 
seriousness of these governmental proceedings. The General 
Services Administration could advantageously arrange for the 
service and the space needed by departments and agencies in 
which administrative hearings occur. 

RECOMMENDATION 

1. The General Services Administration should develop a set 
of four hearing room classifications explicitly identifying the 
features required with standards meeting at least the following 
minimum requirements. Such classifications should be developed 
in conjunction with representatives of the agencies, the bar, and 
examiners. The minimum requirements should be : 

Type A — A formal conference room with table space for as 
many as 16 principals and additional seating for up to 20 
other persons. 
Type B — A small hearing room with a raised dais, a wit- 
ness box, a reporter's table, table space for as many as 
six counsel, and additional seating for up to 30 others. 
The design and furnishings should be appropriate to a 
hearing which is judicial in nature and should include 
wherever possible an auxiliary room in which counsel may 
confer with their clients, witnesses may be sequestered, 
etc. 



^Recommendations Nos. 1-8 were adopted December 10-11, 1968. 



10 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

Type C A large hearing room accommodating as many as 

30 counsel at tables and up to 70 witnesses and spectators. 
This room should have the design and furnishings which 
are appropriate to formal hearings of a judicial nature. 
Type D— An auditorium suitable for hearings of general 
public interest which might attract over 100 principals 
and spectators. 
An essential requirement of each of the four types of hearmg 
rooms should be a small, nearby room available to the exammer 
as his office and for such other uses as he designates. 

2. The General Services Administration should prepare and 
maintain on a current basis an inventory which (a) identifies 
available hearing facilities throughout the country, classified un- 
der the system recommended in 1 above, including hearing rooms 
permanently assigned to particular agencies as well as court- 
rooms (local. State, and Federal), (b) identifies the GSA re- 
gional offices, local building managers, and others through whom 
such space can be obtained, and (c) provides information con- 
cerning the procedures to be followed to obtain space through 
the GSA for the conduct of hearings. 

3. The General Services Administration should establish pro- 
cedures for determining the frequency and location of adminis- 
trative hearings which require facilities of each type within the 
system of classification recommended above in order to deter- 
mine, by city, whether a permanent hearing room for multi- 
agency use can be justified. A permanent hearing room should be 
considered justified wherever there is a continuing need of ap- 
proximately one-fourth of the available working days. 

4. The General Services Administration should provide for the 
administration and scheduling of permanent multiagency hear- 
ing facilities under the direction of GSA's Washington headquar- 
ters, but subject to such decentralization as the functions of 
inventorying, procuring, and planning may require. 

5. The General Services Administration should establish a 
procedure for the systematic reporting, to the respective agency 
and to GSA, of deficiencies in assigned facilities discovered by 
presiding officers, and for the investigation and correction of 
such deficiencies. 

6. The General Services Administration should establish an 
advisory committee of members of the bar and other interested 
professional associations, agency representatives, and members 
of the public to facilitate the evaluation of present and future 
needs and to report annually to the Administrative Conference 
on its activities. 



OFFICIAL RECOMMENDATIONS H 

7. Permanent multiaRency hearing: rooms and hearing rooms 
permanently assigned to individual Federal agencies should be 
identified as "Federal Administrative Hearing Rooms." 

8. The Chairman of the Administrative Conference should en- 
courage the cooperation of State and local judges in the procure- 
ment of courtroom space for Federal administrative hearings. 

9. The Judicial Conference of the United States should en- 
courage the cooperation of Federal judges in the procurement of 
courtroom space for Federal administrative hearings. 

10. Federal agencies should budget funds to provide for the 
payment of charges for the use of appropriate space when such 
space is not available on a free basis. 

11. Federal agencies which conduct administrative hearings 
should designate an official to work with the General Services 
Administration in the procurement and planning of hearing 
facilities. 

RECOMMENDATION NO. 2 
U.S. GOVERNMENT ORGANIZATION MANUAL 

The manual at present falls short of its goal because the narra- 
tive text submitted by some of the agencies is outdated, unreveal- 
ing, cumbersome, or otherwise deficient. The text should be re- 
written at a high level of competence. 

RECOMMENDATION 

1. Each agency covered by 5 U.S.C. 552 should assign the 
writing of material for the "U.S. Government Organization Man- 
ual" to an office having the competence to achieve the brevity, 
clarity, and general excellence of presentation required to serve 
the purpose of this handbook and to reflect credit on our govern- 
ment. 

2. Included in the description of each agency should be in- 
formation concerning the means by which more detailed knowl- 
edge of the agency's organization and functions may be obtained. 

RECOMMENDATION NO. 3 

PARALLEL TABLE OF STATUTORY AUTHORITIES 
AND RULES (2 CFR CH. I) 

The Parallel Table of Statutory Authorities and Rules (2 CFR 
ch. I) should be an accurate and complete listing of United 



12 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

States Code provisions cited as rulemaking authority in executive 
agency documents which prescribe general and permanent rules. 
The present Parallel Table is deficient. Agencies have not given 
sufficient time and attention to citing proper authorities and to 
keeping them current. Moreover, the Table's present method of 
preparation leads to omission of relevant references. 

RECOMMENDATION 

1 Each agency covered by 5 U.S.C. 552 should review all of its 
rules published in the Code of Federal Regulations to determine 
if the cited rulemaking authorities are complete, accurate, and 
current. The Conference requests that formal documents cor- 
recting deficient citations be submitted to the Office of the Fed- 
eral Register for publication in the daily "Federal Register." 

2 The Office of the Federal Register should take the steps 
necessary to broaden the coverage of the Table to include perti- 
nent citations in preambles and in codified text as well as those 
in the formal statements of authority. 



RECOMMENDATION NO. 4 
CONSUMER BULLETIN 

Most Americans are probably unaware of the multitude of 
day-to-day Federal activities reflected in proposed, revised, and 
recently promulgated rules, regulations, or determinations which 
substantially affect the price, quantity, quality, labeling, safety, 
and other aspects of products and services available to the public. 
A bulletin of general distribution containing an easily under- 
stood summary of current information about administrative ac- 
tivities in areas of consumer interest could serve a widespi^ead 
public need which is not now met by the "Federal Register or 
by agency and private publications of a more specialized nature. 

RECOMMENDATION 

1. A consumer bulletin should be established on an experi- 
mental basis. It should extract and paraphrase in popular terms 
the substance of Federal agency actions of significant interest 
to consumers. Initially, the bulletin should concentrate on items 
published in the "Federal Register," but as it gains pubhc ac- 
ceptance, it should be broadened to include materials secured 



OFFICIAL RECOMMENDATIONS 13 

from other sources. It should indicate expressly that the bulletin 
does not constitute official notice of government action. 

2. The Office of the Consumer Counsel in the Department of 
Justice appears at this time to be the agency best prepared to 
publish such a bulletin. If the bulletin were undertaken by that 
office, it could not only disseminate information, but also stimu- 
late public response, thus aiding the effective discharge of the 
duties of the Consumer Counsel. 

3. Initial circulation should include the press, consumer orga- 
nizations, public and scholastic libraries, and individuals who 
request to be put on the mailing list. Format, subscription costs, 
frequency of publication, and related matters should be the sub- 
ject of study during the experiment. 

4. After a reasonable period of time, the effectiveness of and 
interest in the bulletin should be evaluated to determine whether 
it should be continued and, if so, in what form. 



RECOMMENDATION NO. 5 

REPRESENTATION OF THE POOR IN AGENCY RULE- 
MAKING OF DIRECT CONSEQUENCE TO THEM 

RECOMMENDATION 

A. Agency Efforts 

1. Federal agencies should engage more extensively in affirma- 
tive, self-initiated efforts to ascertain directly from the poor 
their views with respect to rulemaking that may affect them 
substantially. For this purpose, agencies should make strong 
efforts, by use of existing as well as newly devised procedures, 
to obtain information and opinion from those whose circum- 
stances may not permit conventional participation in rulemaking 
proceedings. The "rulemaking" referred to is that defined by 
the Administrative Procedure Act, §2(c), 5 U.S.C. 551 (4) 
and (5). 

2. Agencies should employ as many of the following procedures 
as are feasible, practicable, and necessary to assure their being 
fully informed concerning the relevant interests of the poor : 

(a) Agencies should seek to inform the poor of all rulemaking 
proposals that may affect them substantially and should provide 
opportunities for the poor to submit their views concerning these 
and related proposals. 



14 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

(b) Agencies should hold formal public hearings or informal 
conferences in close geographic proximity to the poor substan- 
tially affected by contemplated rulemaking. 

(c) Agencies should take care to invite individuals constitut- 
ing a representative cross-section of the poor to submit then- 
views orally or in writing as to proposed rules substantially af- 
fecting the poor. 

(d) Agencies should conduct field surveys among the poor to 
discover their attitudes concerning particular government policy- 
making substantially affecting them. 

(e) Agencies should use advisory committees made up of rep- 
resentatives of the poor as continuing consultants for all pro- 
grams having a substantial effect on such persons. 

(f) When necessary to assure adequate representation for the 
poor, agencies should pay the personal expenses and wage losses 
incurred by individuals incident to their participation m rule- 
making hearings. Congress should support agency requests for 
funds and for authority, where none exists, to make discretionary 
payments for this purpose. Agencies already authorized to make 
such payments in whole or in part should use their existing 
authority and should allocate funds accordingly. 

In deciding whether the use of any one or more of the above 
devices is feasible, practicable, or necessary in a given situation 
agencies should resolve doubts in favor of utilizing them; but 
their enumeration should not exclude or discourage the develop- 
ment and use of other devices to achieve the same result. 

In carrying out paragraphs 1 and 2 of this recommendation 
agencies should consult with and coordinate their efforts with 
other Federal agencies having responsibilities in this area and 
should make maximum feasible use of the facilities of such other 
agencies for communicating with and obtaining expressions of 
the views of the poor. 

3 Agencies should be encouraged in appropriate circumstances 
to determine that the exemptions in 5 U.S.C. 553(a) (2) should 
not be applied with respect to rulemaking which may have a 
substantial impact on the poor. 

B. People's Counsel 

4 (a) An organization should be authorized by statute to em- 
ploy a staff to act as "People's Counsel." The People's Counsel 
should represent the interests of the poor in all Federal adminis- 
trative rulemaking substantially affecting the poor. 

(b) The People's Counsel should be charged with assuring that 



OFFICIAL RECOMMENDATIONS 15 

the views of significant separable minority interests among the 
poor are represented in such Federal administrative rulemaking. 

(c) The People's Counsel should be required to disseminate to 
all interested poor people's organizations pertinent information 
concerning rulemaking substantially affecting the poor. 

(d) The People's Counsel should be authorized to participate 
suitably in its own name to represent the interests of the poor 
in any Federal agency proceedings in which the poor have a 
substantial interest. 

(e) The People's Counsel should be authorized to provide rep- 
resentation for organizations and groups of the poor who seek 
judicial review of administrative action substantially affecting 
their interests. This recommendation is not to alter the kinds of 
agency action amenable to judicial review, the requirements of 
standing to seek review, or the scope of that review. 

(f) As an incident to its main responsibilities the People's 
Counsel should be empowered to recommend to Congress or the 
President or to both such legislation or other action as it deems 
appropriate to correct deficiencies in or otherwise improve Fed- 
eral programs having a substantial impact on the poor. 

5. (a) Congress should provide for an appropriate body to 
perform the functions outlined in section 4. Deserving of con- 
sideration as such body would be a new single-purpose corpora- 
tion, to be created by Congress, modeled on the Corporation for 
Public Broadcasting, Public Law 90-129, 81 Stat. 368 (1967), 
47 U.S.C. (Supp. Ill) 396, and to be known as the People's 
Counsel Corporation. In the event this form of organization is 
adopted, the following considerations should apply: 

(1) The People's Counsel Corporation should be made tax 
exempt and authorized to accept grants of private funds. 
Gifts to the Corporation should be made deductible as chari- 
table contributions for Federal income tax purposes. 

(2) Federal financing of the Corporation should be made 
available to the extent necessary to assure its effective 
operation. 

(3) The governing board of the People's Counsel Cor- 
poration should be constituted to give the poor meaningful 
representation thereon. Such body should be constituted to 
ensure close communication with the poor and effective rep- 
resentation of the viewpoints of the poor. 

6. All Federal agencies should be required by Executive order 
to notify the People's Counsel of all proposed rules which would 
have a substantial impact on the poor. Agencies also should be 
required by that Executive order to give the People's Counsel an 



16 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

u Ih ti not fv the People's Counsel as soon as practicable 

!f^ a7; — ™:"lr— fn. substantially affectin, the poor 
„L ohonld be required to give the Counsel as soon as practicable 
afoppor^unHy to communicate to the agency its views concern- 
ing the desirability of further action with respect to such rule- 



" Without prejudice to creating or empowering any other ap- 

--H f a d rz-:::^^^^^^ - - 

S't r 'dtttl m'a^Lum Vantage of *e capaMlitie^ ni 
tWs field of nongovernment organizations, and of other pubhc 
lodies including notably the Office of Economic Opportunity., 

SEPARATE STATEMENTS = CONCERNING RECOMMENDATION NO. 5 

Statement of John H.Crooker, Jr. _ 

The majority position with respect to recommendation No 5 

-de^ge— ri^a- ^^ri^=-^ 

^e Adm^isUtive Conference, to have ^'"'''^-"^^.tMstrft ve' 
formation collected and interchanged, so that administrax. 
agencts might improve and expedite their genera procedures 
''Therefore, I doubt that the Congress in enacting sect^n o 
the Administrative Conference Act, 5 U.S.C. 5M, mienueu 
Ihe cZference should address itself to the matters treated in 
*re:ommeTdation No. 6. My dissent is not, in any way, directed to 

the wording of the recommendation. 

. iinwB- "A member who disagrees 

^ Title 5. U.S.C.. sec. 575(a)(1) provides, in part ^y^^J' ^^ ^^^er a dissenting opinion 
.ith a recommendation adopted by the ^--bh^^^Ve^ce proceedings, and the opinion and 

;roLr:ntrerr.f airnr^^^ - ^ ---"- - '- 



tribution thereof." 



OFFICIAL RECOMMENDATIONS 17 

Statement of Paul Rand Dixon 

I disagree with the adoption of paragraphs 4, 5, and 6 of recom- 
mendation No. 5 developed by the Committee on Rulemaking 
respecting the creation of a People's Counsel to represent the 
poor generally before Federal administrative bodies. I am fully 
aware of and sympathetic with the plight of the poor in our 
society. I recognize it as one of the primary problems that must 
be solved if our democratic way is to survive. However, I am 
fully of the opinion that this is a problem that should be debated 
and resolved by Congress. I find nowhere in the legislative history 
leading to the creation of the Administrative Conference of the 
United States any thought that the Administrative Conference 
would delve into this social problem. Even if I could bring myself 
to the thought that it was rightfully within the purview of the 
duties of the Administrative Conference to deal with the plight 
of the poor, I still would question the wisdom of creating a Poor 
People's Counsel as the sole, if not principal, protector of the 
rights of the poor. The plight of the poor needs everyone's pro- 
tection, not just the protection of a People's Counsel. 

So that my position will not be misunderstood, I want it 
clearly known that I stand in the forefront of those who deem 
it necessary to do more to protect those low-income people in 
our society who are generally classified as poor. 

Statement of Joe M. Kilgore, joined by Richard H. Keatinge; 
Jim C. Lang don; Norman A. Flaningam; ^ Ross L. Malone; 
Starr Thomas; Harold L. Russell 

We did not support paragraph 4, 5, and 6 of the recommenda- 
tion No. 5. We do support encouraging the formation of and 
recognition of a People's Counsel, as a private entity, to represent 
the public interest in the area of rulemaking in Federal agencies ; 
with such Counsel being oriented to represent most fully those 
of the public whose interests would otherwise be unrepresented 
or underrepresented ; and with such People's Counsel being eligi- 
ble to receive Federal grants as required to permit its function. 

This dissent from the majority view is dictated by: 

1. The concern that this proposed function should be restricted, 
at least until experience might dictate otherwise, to the rule- 
making function. 

2. The belief that the proposed representation should not be 



' Mr. Flaningam joins in this statement noting that the term "rulemaking" as used herein 
refers to Federal agency processes for formulation, amendment, or repeal of rules of general 
applicability. 



18 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

limited to any segment of the public, even though its principal 
thrust would be so directed. 

Statement of Malcolm S. Mason 

I support the purposes of this recommendation. When a People's 
Counsel is constituted, however, it is important to make a dis- 
tinction between two kinds of advocacy, so different that they 
cannot be directly conducted by the same organization. There is 
first of all adversary advocacy, owing an attorney's complete 
loyalty to a specific client. In this sense, there cannot be a 
People's Counsel for the poor, because the poor are many and 
different and must be able to speak with many voices. This kind 
of advocacy is needed. It must be aggressive and hardhitting. If 
it is conducted directly by a Government or Government-con- 
trolled agency, its independence may be impaired. For this kmd 
of advocacy an appropriate model is suggested by the Legal Serv- 
ices program conducted by many separate private local organiza- 
tions : Funded by GEO, but free, and indeed encouraged, to act 
fully on behalf of an actual client without limiting its vigor by 
reason of relationship to GEO. This, I believe, will also be the 
pattern of the new HEW Legal Services program. 

There is also cooperative advocacy: Unaggressive, quiet, non- 
adversary, seeking to foster an awareness, a concern and a more 
lively recognition that poor people are affected by proposed ad- 
ministrative action. This kind of advocacy can be conducted by 
a Government or quasi-Government organization without incon- 
sistency and with benefit to the effectiveness of its work. An 
appropriate model is suggested by such accomplishments as new 
rules on loans to demonstration cooperatives of poor farmers 
(achieved by mutual agreement of the Department of Agriculture 
and GEO) ; new clarification of Government security regulations, 
removing barriers to the employment of hard-core unemployed 
with a criminal record (achieved by joint action of the Depart- 
ment of Defense, Department of Labor, and GEO) ; a new con- 
sensus on the wider use of policy advisory boards in programs 
affecting the poor (resulting in part from encouragement of this 
kind of action by GEG). 

I urge that the Conference recommendation be implemented. 
In its implementation, contributions already made in this field 
should be recognized and used as a basis for expanded activity. 
The distinction between the two different types of advocacy 
should also be reflected in the choice of appropriate structure. 
Both are needed. 



OFFICIAL RECOMMENDATIONS 19 

Statement of Nathaniel L. Nathanson 

I would like to explain why I voted in favor of the recommenda- 
tion for a People's Counsel, as amended during the debate, because 
I believe that my interpretation of the final action taken may have 
been shared by others who also voted in favor of the proposal 
and is therefore entitled to some consideration in efforts to secure 
its implementation. 

While I was deeply troubled by some of the arguments ad- 
vanced against the proposal, particularly by the misgivings ex- 
pressed concerning the arrogance of a government agency or 
public corporation undertaking to determine the interests of the 
poor in particular agency action, I felt that this concern could be 
met by emphasis upon the representative character of the People's 
Counsel and a requirement that specific, identifiable interests be 
represented, rather than hypothetical interests which might be 
imagined by the People's Counsel. This requirement could ap- 
propriately be implemented by the further r^^quirement that those 
interests be identified in the form of particular groups or associa- 
tions who could determine their own interests and make their 
own wishes or basic positions known to the People's Counsel. 
This view was certainly made explicit in the amendment, pro- 
posed by the Judicial Review Committee and accepted by the 
Rulemaking Committee, to paragraph 4(e) and it is also consist- 
ent with the final language of paragraph 4(d) as amended in 
the course of the debate so as to substitute "participate suitably" 
for the original word "intervene." This left a large measure of 
discretion to each agency in allowing participation by the People's 
Counsel in a particular proceeding, including the requirement of 
a showing that the concern or position which the People's Counsel 
undertook to present was in fact shared by an identifiable group 
of people who were at least informed of the position which the 
People's Counsel was taking. I also doubt that the leaders of the 
poor people's movement who were quoted by Professor Bonfield as 
favorable to the proposal envisaged a People's Counsel who would 
not be in any way answerable to the people he undertook to 
represent. 

I appreciate that this interpretation, emphasizing as it does the 
representation of identifiable groups who may exercise some con- 
trol over the People's Counsel, may not be entirely acceptable 
to the original proponents of the proposal, particularly those who 
accepted the amendments with some reluctance. Nevertheless, 
they did accept the amendments, presumably for the purposes of 
mollifying the opposition and with some appreciation of the fact 



20 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

that the reasons for the amendments were more than technical. 
Particularly in view of the closeness of the vote on the final ap- 
proval of paragraphs 4, 5, and 6, the original proponents are 
hardly now in a position to insist upon the rejection of a reason- 
able interpretation which may have been decisive in the approval 
of the recommendation. They may also take comfort in the fact 
that the current requirements for standing to participate in 
both administrative and judicial proceedings by groups indirectly 
affected by governmental action will scarcely inhibit the activ- 
ities of a People's Counsel anxious and resourceful enough to find 
out what the people he purports to represent really want. 

Statement of Robert W. Graham 

May I respectfully record my dissent from the recommenda- 
tions of the Conference embodied in paragraphs 4, 5, and 6 of 
recommendation No. 5. No one can disagree with the stated ob- 
jectives of these recommendations, and I do not. However, I do 
not conceive that these recommendations are appropriate within 
the mission of the Administrative Conference in its efforts to 
seek improvement of administrative procedures. Furthermore, I 
consider unsound attempts to fractionate the public interest which 
is properly the concern of our Federal administrative agencies. 



RECOMMENDATION NO. 6 

DELEGATION OF FINAL DECISIONAL AUTHORITY 
SUBJECT TO DISCRETIONARY REVIEW BY THE AGENCY 

RECOMMENDATION 

1. In order to make more efficient use of the time and energies 
of agency members and their staffs, to improve the quality of 
decision without sacrificing procedural fairness, and to help elim- 
inate delay in the administrative process, every agency having a 
substantial caseload of formal adjudications should consider the 
establishment of one or more intermediate appellate boards or 
the adoption of procedures for according administrative finality 
to presiding officers' decisions, with discretionary authority in 
the agency to affirm summarily or to review, in whole or in part, 
the decisions of such boards or officers. 

2. Section 8 of the Administrative Procedure Act, 5 U.S.C. 
557, should be amended as necessary to clarify the authority of 
agencies to restructure their decisional processes along either of 
the following lines: 



OFFICIAL RECOMMENDATIONS 21 

(a) Intermediate appellate hoards 

(1) Whenever an agency deems it appropriate for the efficient 
and orderly conduct of its business, it may, by rule or order : 

(a) Establish one or more intermediate appellate boards 
consisting of agency employees qualified by training, experi- 
ence, and competence to perform review functions, 

(b) Authorize these boards to perform functions in con- 
nection with the disposition of cases of the same character 
as those which may be performed by the agency, 

(c) Prescribe procedures for review of subordinate de- 
cisions by such boards or by the agency, and 

(d) Restrict the scope of inquiry by such boards and by 
the agency in any review, without impairing the authority 
of the agency in any case to decide on its own motion any 
question of procedure, fact, law, policy, or discretion as fully 
as if it were making the initial decision. 

(2) Any order or decision of an intermediate appellate board, 
unless reviewed by the agency, shall have the same force and ef- 
fect and shall be made, evidenced, and enforced in the same man- 
ner as orders and decisions of the agency. 

(3) A party aggrieved by an order of such board may file an 
application for review by the agency within such time and in 
such manner as the agency shall prescribe, and every such ap- 
plication shall be passed upon by the agency. 

(4) In passing upon such applications for review, an agency 
may grant, in whole or in part, or deny the application without 
specifying any reasons therefor. No such application shall rely 
upon questions of fact or law upon which the intermediate ap- 
pellate board has been afforded no opportunity to pass. 

(5) An agency, on its own initiative, may review in whole or in 
part, at such time and in such manner as it shall determine, any 
order, decision, report, or other action made or taken by an inter- 
mediate appellate board., 

(6) If an agency grants an application for review or under- 
takes review on its own motion, it may affirm, modify, reverse, 
or set aside the order, decision, report or other action of the 
intermediate appellate board, or may remand the proceeding for 
reconsideration. 

(7) The filing of an application for agency review shall be a 
condition precedent to judicial review of any order of an inter- 
mediate appellate board. 

(8) Agency employees performing review functions shall not 
be responsible to or subject to the supervision or direction of 



22 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

any employee or agent engaged in the performance of investiga- 
tive or prosecuting functions for any agency. 

(b) Discretionary revieiv of decisions of presiding officers 

(1) When a party to a proceeding seeks administrative revievv^ 
of an initial decision rendered bj?^ the presiding officer (or other 
officer authorized by law to make such decision), the agency may 
accord administrative finality to the initial decision by denying 
the petition for its review, or by summarily affirming the initial 
decision, unless the party seeking review makes a reasonable 
showing that: 

(a) A prejudicial procedural error was committed in the 
conduct of the proceeding, or 

(b) The initial decision embodies (i) a finding or con- 
clusion of material fact which is erroneous or clearly er- 
roneous, as the agency may by rule provide; (ii) a legal 
conclusion which is erroneous; or (iii) an exercise of dis- 
cretion or decision of law or policy which is important and 
which the agency should review. 

(2) The agency's decision to accord or not to accord admin- 
istrative finality to an initial decision shall not be subject to 
judicial review. If the initial decision becomes the decision of 
the agency, however, because it is summarily affirmed by the 
agency or because the petition for its review is denied, such 
decision of the agency will be subject to judicial review in ac- 
cordance with established law. 



RECOMMENDATION NO. 7 

ELIMINATION OF JURISDICTIONAL AMOUNT 
REQUIREMENT IN JUDICIAL REVIEW 

RECOMMENDATION 

Title 28 of the United States Code should be amended to elim- 
inate any requirement of a minimum jurisdictional amount be- 
fore U.S. district courts may exercise original jurisdiction over 
any action in which the plaintiff alleges that he has been injured 
or threatened with injury by an officer or employee of the United 
States or any agency thereof, acting under color of Federal law. 
This amendment is not to affect other limitations on the avail- 
ability or scope of judicial review of Federal administrative 
action. 



OFFICIAL RECOMMENDATIONS 23 

RECOMMENDATION NO. 8 

JUDICIAL REVIEW OF INTERSTATE COMMERCE 
COMMISSION ORDERS 

RECOMMENDATION 

Judicial review of orders of the Interstate Commerce Com- 
mission in cases where at present a special three-judge District 
court is used under 28 U.S.C. 2325 should be by petition to review 
in the U.S. Courts of Appeals in the same general manner as 
review of agency orders under the Judicial Review Act of 1950, 
28 U.S.C. (Supp. II, 1967) 2341-2352. 



RECOMMENDATION NO. 9 

STATUTORY REFORM OF THE SOVEREIGN 
IMMUNITY DOCTRINE' 

The technical legal defense of sovereign immunity, which the 
Government may still use in some instances to block suits against 
it by its citizens regardless of the merit of their claims, has 
become in large measure unacceptable. Many years ago the United 
States by statute accepted legal responsibility for contractual 
liability and for various types of misconduct by its employees. 
The "doctrine of sovereign immunity" should be similarly limited 
where it blocks the right of citizens to challenge in courts the 
legality of acts of governmental administrators. To this end the 
Administrative Procedure Act should be amended. 

RECOMMENDATION 

1. Section 702 of title 5, United States Code (formerly section 
10(a) of the Administrative Procedure Act), should be amended 
by adding the following at the end of the section : 

An action in a court of the United States seeking relief other than 
money damages and stating a claim that an agency or an officer or em- 
ployee thereof acted or failed to act in an official capacity or under color 
of legal authority shall not be dismissed nor relief therein denied on the 
ground that it is against the United States or that the United States is an 
indispensable party. The United States may be named as a defendant in 
any such action, and a judgment or decree may be entered against the 
United States. Nothing herein (1) affects other limitations on judicial re- 



^ Recommendations Nos. 9-17 were adopted October 21-22, 1969. 



24 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

view or the power or duty of the court to dismiss any action or deny 
relief on any other appropriate legal or equitable ground; or (2) confers 
authority to grant relief if any other statute that grants consent to suit 
expressly or impliedly forbids the relief which is sought. 

2. Section 703 of title 5, United States Code (formerly section 
10(b) of the Administrative Procedure Act), should be amended 
by adding the following sentence after the first full sentence: 

If no special statutory review proceeding is applicable, the action for 
judicial review may be brought against the United States, the agency by 
its official title, or the appropriate officer. 

RECOMMENDATION NO. 10 

JUDICIAL ENFORCEMENT OF ORDERS OF THE 
NATIONAL LABOR RELATIONS BOARD 

RECOMMENDATION 

The orders of most major independent regulatory agencies 
normally become enforceable automatically unless challenged m 
court. The statutory requirement that an order of the NLRB 
can be made effective only by affirmative action to obtain judicial 
confirmation of its terms, even when its validity is wholly un- 
contested, is contrary to efficient law enforcement. The Adminis- 
trative Conference of 1961-62 urged that NLRB orders be 
treated, for purposes of judicial review, like those of the other 
major independent administrative agencies. That recommenda- 
tion remains as sound today as when it was first made. The 
present practice burdens the courts with unnecessary proceedings 
whose only product is delay rather than added protection against 
ill-founded action. In the absence of any challenge after due 
notice to the parties, NLRB orders should be enforceable by the 
U.S. Courts of Appeals without further intermediate steps. 

RECOMMENDATION NO. 11 

PUBLICATION OF A "GUIDE TO FEDERAL 
REPORTING REQUIREMENTS" 

Popular demand for the official index digest entitled "Guide to 
Record Retention Requirements" indicates that a companion piece 
covering the matter of Federal reporting requirements would 
serve a public need. 



OFFICIAL RECOMMENDATIONS 25 

RECOMMENDATION 

1. Each agency subject to chapter 35, title 44, United States 
Code, entitled "Coordination of Federal Reporting Services," 
should make separate digests of and citations to each statutory- 
provision and each regulatory provision relied upon by the agency 
for the solicitation of information as contemplated by chapter 35. 

2. After consultation with the Bureau of the Budget, the Di- 
rector of the Federal Register should prescribe the style, cover- 
age, and submission of such digests, and should publish the over- 
all "Guide to Federal Reporting Requirements" in the Federal 
Register in the same manner used for the publication of the 
"Guide to Record Retention Requirements." 



RECOMMENDATION NO. 12 

ANALYTICAL SUBJECT-INDEXES TO SELECTED 
VOLUMES OF THE CODE OF FEDERAL REGULATIONS 

Currently the Code of Federal Regulations is updated annually 
by the issuance of some 112 revised books. Many of these books are 
self-indexing. The usefulness of some books may be greatly im- 
paired by the lack of an analytical subject index. 

RECOMMENDATION 

1. Each agency contributing substantially to the CFR should 
review its materials and (a) determine what books should include 
an analytical subject index, and (b) arrange for the preparation 
and publication of requisite indexes., 

2. The Office of the Federal Register should review proffered 
indexes and arrange for the publication of those that appear to 
be professionally adequate. 



RECOMMENDATION NO. 13 

ELIMINATION OF DUPLICATIVE HEARINGS IN FAA 
SAFETY DE-CERTIFICATION CASES 



RECOMMENDATION 

The Federal Aviation Administrator has authority to revoke or 
suspend the licenses of aviation personnel and training facilities, 



26 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

airworthiness certificates, and other permits related to the opera- 
tion of aircraft. Present procedures contemplate a full trial-type 
hearing, if one is desired by the respondent, before the Admin- 
istrator issues an order of suspension or revocation. If an appeal 
is taken from that order, a second full hearing is afforded by the 
National Transportation Safety Board. This is wasteful of time 
and personnel, and is unnecessary as a protection of affected 
parties. 

In order to expedite proceedings bearing directly on public 
safety, without sacrificing the interests of individual respondents, 
the Federal Aviation Administrator should discontinue providing 
hearings in the nature of trials in "certificate actions." This will 
not result in "punishment before trial," since the effective date of 
a certificate action order is invariably postponed, except in emer- 
gency situations, pending the outcome of proceedings before the 
National Transportation Safety Board. 



RECOMMENDATION NO. 14 

COMPILATION OF STATISTICS ON ADMINISTRATIVE 
PROCEEDINGS BY FEDERAL DEPARTMENTS AND 
AGENCIES 

Government agencies which conduct formal or informal rule- 
making proceedings or cases of adjudication which directly fix 
the rights and obligations of private persons (hereafter referred 
to as "proceedings")'^ owe a special duty to the individuals 
affected and to the general public to manage their caseloads as 
efficiently as possible, to eliminate inordinate delays in the con- 
duct of proceedings, and to work continuously toward improving 
the fairness, effectiveness, and economy of their procedures. The 
present volume of Federal administrative proceedings is so great 
that much of the basic information needed in these efforts can be 
developed in intelligible and useful form only through statistical 
study. The compilation and publication of comprehensive sta- 
tistics on Federal agency proceedings, at regular intervals would : 
— Provide each agency with information concerning its 

business which would enable it to manage its caseload 

more effectively. 



' The agency compilations proposed by this recommendation should not be limited to formal [ 

proceedings, or indeed to "proceedings" as that term has been employed in gathering statis- ' 
tics for past conferences or Congressional groups. Rather, agency figures should report all 

matters directly fixing the rights, privileges, and obligations of private interests, including .. 

the routine handling of applications and claims. l] 



OFFICIAL RECOMMENDATIONS 27 

— Augment generally the information concerning its ac- 
tivities which each agency must furnish to the President, 
the Congress, and the public, 

— Afford affected parties and their counsel a better under- 
standing of the administrative processes which determine 
their rights and obligations, and 

— Provide a basis for specific study of particular agency pro- 
cedures by the agency itself, by committees of Congress, 
the Administrative Conference of the United States, the 
organized bar, research scholars, and other individuals 
and organizations, public and private, interested in im- 
proving the Federal administrative process. 

RECOMMENDATION 

1. To the extent deemed useful to advance the purposes of this 
recommendation, each Federal administrative agency which con- 
ducts proceedings (as defined above) affecting private persons' 
rights, privileges or obligations, should prepare annual statisti- 
cal data pertaining to those proceedings, to be compiled in such 
manner and presented in such publications as the agency con- 
siders appropriate. 

2. These statistical compilations should list the kinds of pro- 
ceedings pending during the year, with a concise yet meaningful 
description of the nature and purpose of each kind of proceeding 
and citations for the statutory authority under which the pro- 
ceedings are conducted, and the sections of the Code of Federal 
Regulations which set forth the rules of practice governing each 
kind of proceeding. 

3. For the purpose of agency efforts that may be made in 
cooperation with the Chairman of the Administrative Conference 
of the United States, to lessen delays in administrative proceed- 
ings, the statistical compilation should show the number of days 
which elapsed during each significant step of the proceedings 
which were concluded during the year. 

4. In designing each agency's compilation, the following in- 
formation, together with the time-study data referred to in 3 
above, should be considered minimal: 

(a) The number of proceedings of each kind pending at 
the beginning of the year ; 

(b) The number of new proceedings filed or otherwise 
commenced during the year; 

(c) The number of proceedings concluded during the year 
and the manner of their disposition (i.e., by settlement. 



28 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

dismissal on procedural grounds, decision on the merits 
without hearing, final decision by agency after hearing, and 
an examiner's initial decision, etc.) ; 

(d) The number of proceedings remaining at the end of 
the year ; and 

(e) The number of proceedings concluded during the year 
which were appealed to the courts. 

5. Each agency should periodically analyze all of the informa- 
tion thus compiled and should develop improved techniques fitted 
to its particular needs to reduce delays and expense and other- 
wise to improve its administrative processes. A copy of this 
analysis should be submitted to the Administrative Conference 
of the United States. 

6. In presenting its statistical compilation, each agency should 
summarize this analysis and describe the specific steps it has 
taken toward the ends referred to in 5 above. 

7. Each agency, in its subsequent compilations, should follow 
a pattern that makes possible a comparison of data with corre- 
sponding data for earlier periods, thus reflecting changes in back- 
logs, volumes, and elapsed times and providing a measure of the 
agency's experience following the specific actions referred to in 
6 above. 

RECOMMENDATION NO. 15 

CONSIDERATION OF ALTERNATIVES IN LICENSING 
PROCEDURES 

Court decisions, notably Scenic Hudson Preservation Confer- 
ence V. FPC ° have emphasized that in licensing cases the Federal 
Power Commission must explore and give proper consideration 
to possible alternatives to the specific plan proposed by the ap- 
plicant. This principle may in the future be applied to other 
licensing agencies. Since the range of possible alternatives in any 
case can be extensive and in some cases virtually unbounded, 
ways must be sought to control the scope and duration of licens- 
ing proceedings within manageable limits while meeting the 
requirements of the law. 

RECOMMENDATION 

Each agency which issues licenses, permits, or other forms of 
authorization, should seek to create procedures fitting its partic- 



«354 F. 2d 608 (2d Cir. 1965), cert, denied. 384 U.S. 941 (1966). See also Udall v. FPC, 
387 U.S. 428 (1967). 



OFFICIAL RECOMMENDATIONS 29 

ular circumstances which will assure appropriate consideration 
of alternatives where necessary, and at the same time will per- 
mit effective administration of that agency's licensing functions. 
Because the various agencies must deal in their licensing pro- 
cedures with many diverse subject matters, the Administrative 
Conference cannot specify a single rule and procedure for achiev- 
ing this objective. Procedural techniques which experience has 
shown useful in analogous situations and which an agency might 
consider include: (1) Guidelines embodying a rule of reason 
concerning the number and character of alternatives to be con- 
sidered in particular types of cases; (2) rules providing a point 
in time beyond which the issues in a proceeding will not be 
expanded to include additional alternatives except under com- 
pelling circumstances; (3) techniques, such as prehearing con- 
ferences and the filing of testimony in written form before trial, 
which tend to promote early identification of interested parties 
and important alternatives; and (4) placing responsibility upon 
the party or other person proposing an alternative to the ap- 
plicant's proposal to make an appropriate threshold showing that 
the alternative deserves the agency's consideration. 



RECOMMENDATION N0.W6*f-S 

ELIMINATION OF CERTAIN EXEMPTIONS FROM THE 
APA RULEMAKING REQUIREMENTS 



RECOMMENDATION 

In order to assure that Federal agencies will have the benefit of 
the information and opinion that can be supplied by persons 
whom regulations will aflfect, the Administrative Procedure Act 
requires that the public must have opportunity to participate in 
rulemaking proceedings. The procedures to assure this oppor- 
tunity are not required by law, however, when rules are pro- 
mulgated in relation to "public property, loans, grants, benefits, 
or contracts." These types of rules may nevertheless bear heavily 
upon nongovernmental interests. Exempting them from generally 
applicable procedural requirements is unwise. The present law 
should therefore be amended to discontinue the exemptions to 
strengthen procedures that will make for fair, informed exercise 
of rulemaking authority in these as in other areas. 

Removing these statutory exemptions would not diminish the 
power of the agencies to omit the prescribed rulemaking pro- 



30 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

cedures whenever their observances were found to be impracti- 
cable, unnecessary, or contrary to the public interest. A finding to 
that effect can be made, and published in the Federal Register, 
as to an entire subject matter concerning which rules may be 
promulgated. Each finding of this type should be no broader 
than essential and should include a statement of underlying 
reasons rather than a merely conclusory recital. 

Wholly without statutory amendment, agencies already have 
the authority to utilize the generally applicable procedural meth- 
ods even when formulating rules of the exempt types now under 
discussion. They are urged to utilize their existing powers to 
employ the rulemaking procedures provided by the Administra- 
tive Procedure Act, whenever appropriate, without awaiting a 
legislative command to do so. 



RECOMMENDATION NO. 17 

RECRUITMENT AND SELECTION OF HEARING EXAMIN- 
ERS; CONTINUING TRAINING FOR GOVERNMENT 
ATTORNEYS AND HEARING EXAMINERS; CREATION 
OF A CENTER FOR CONTINUING LEGAL EDUCATION 
IN GOVERNMENT 



RECOMMENDATION 
A. RECRUITMENT AND SELECTION OF HEARING EXAMINERS 

1. The Civil Service Commission should enlarge the base of 
recruitment and the number of qualified candidates available 
for appointment to hearing examiner positions by recognizing 
trial experience as one basis for qualification. 

2. The Civil Service Commission should depart experimentally 
from the selective certification system as now practiced in the 
appointment of hearing examiners. Instead, it should develop a 
system under which the number of candidates qualified for hear- 
ing examiner positions is enlarged through the use of a general 
register for all agencies, with additional credit for specific rele- 
vant professional experience or selective certification for those 
agencies which demonstrate to the Civil Service Commission's 
satisfaction a current need for personnel possessing a specific 
background. The purpose, of this experiment should be to permit 
meaningful comparative evaluation with the system now in effect. 



OFFICIAL RECOMMENDATIONS 31 

A report should be made to the Administrative Conference after 
3 years ot experience. 

To aid the Civil Service Commission in effectuating the ob- 
jective of this part of the recommendation, the Chairman of the 
Administrative Conference should appoint special committees 
from time to time to evaluate the standards of specific relevant 
professional experience proposed to the Civil Service Commission 
by any agency as being required for its v^ork. Present selective 
certification agreements should continue until new standards 
have been adopted by the Civil Service Commission. 

3. The Civil Service Commission should study and, if practi- 
cable, should institute an experimental intern program to supple- 
ment the direct appointment of hearing examiners from the 
register. Without finally deciding the issue, the Conference urges 
the Commission to consider anev;^ whether successful interns 
should automatically be placed in hearing examiner positions. 

4. The Veterans Preference Act should be amended to permit 
the selection of examiners for each vacancy from the top 10 
available persons then appearing on the register, determined on 
the basis of examination and ranking without reference to 
veterans preference. 

B. Continuing Training for Government Attorneys 
AND Examiners 

1. Agencies employing attorneys and hearing examiners should 
encourage their participation in programs of continuing legal 
education. Budgets should include adequate funds for personnel 
so that attorneys and examiners may be released for reasonable 
periods of time to accomplish added training. Agencies should 
take all suitable steps to assure wide knowledge of training 
opportunities. 

2. Agencies should also explore ways in which they can sup- 
port the professional training activities of the Federal Trial 
Examiners Conference, bar associations, foundations, the Civil 
Service Commission, law schools, the individual agencies with 
parallel legal interests, and other institutions offering appropriate 
training for attorneys and examiners. 

3. The feasibility of short-term exchange assignments of ex- 
perienced attorneys in higher grades among agencies should be 
considered, in order to enhance the insight and effectiveness of 
government lawyers by exposing them to varied aspects of legal 
problems with which they may deal. 



32 administrative conference of the united states 

c. creation of a center for continuing legal 
Education in Government 

1. A center should be established in the Washington area for 
the continuing- legal education of Government lawyers, hearing 
examiners, and private attorneys practicing before Government 
agencies. The center should also promote coordinated programs 
within the Government and with specialized segments of the 
organized bar; stimulate and engage in the preparation of man- 
uals, research materials, and other publications in support of 
such continuing legal education; and provide a mechanism for 
the exchange of information concerning professional problems 
of Government attorneys. The center, under the direction of 
lawyers, should be oriented toward applied legal problems. The 
Civil Service Commission should make available to it the benefit 
of the Commission's experience in establishing and operating 
Federal Executive institutes and centers. The Federal Adminis- 
trative Justice Center proposed by the American Bar Association 
in a resolution adopted by the American Bar Association's House 
of Delegates in January 1969, as an example, would serve the 
purpose of the present recommendation. 

2. The establishment of the Center should not diminish each 
agency's present responsibility to provide continuing legal educa- 
tion for its own lawyers through "in-house" training programs, 
but the Center should support and assist all agencies in main- 
taining these programs at a high level of effectiveness. 



RECOMMENDATION NO. 18 
PARTIES DEFENDANT^ 

The size and complexity of the Federal Government, coupled 
with the intricate and technical law concerning official capacity 
and parties defendant, have given rise to innumerable cases in 
which a plaintiff's claim has been dismissed because the United 
States or one of its agencies or officers lacked capacity to be 
sued, was improperly identified, or could not be joined as a 
defendant. The ends of justice are not served when dismissal 
on these technical grounds prevents a determination on the merits 
of what may be just claims. Three attempts to cure the de- 
ficiencies of the law of parties defendant have achieved only 
partial success and further changes are required to eliminate 



' Recommendations Nos. 18-22 were adopted June 2-3, 1970. 



OFFICIAL RECOMMENDATIONS 33 

remaining technicalities concerning the identification, naming, 
capacity, and joinder of parties defendant in actions challenging 
federal administrative action. 



RECOMMENDATION 

1. The Federal Rules of Civil Procedure contain liberal pro- 
visions for substitution of parties and for amendment of plead- 
ings and correction of defects as to parties defendant. The 
Department of Justice should instruct its lawyers and United 
States Attorneys to call the attention of the court to these pro- 
visions in cases involving technical defects with respect to the 
naming of parties defendant in any situation in which the plain- 
tiff's complaint provides fair notice of the nature of the claim 
and the summons and complaint were properly served on a 
United States Attorney, the Attorney General, or an officer or 
agency which would have been a proper party if named. The 
Department of Justice should be responsible for determining 
who within our complex federal establishment is responsible for 
the alleged wrong and should take the initiative in seeking cor- 
rection of pleadings or adding of proper parties. Since the De- 
partment of Justice has acquiesced in the substance of this 
recommendation, it would also be appropriate for the Department 
of Justice and the Administrative Conference of the United 
States to seek an amendment of the Federal Rules of Civil Pro- 
cedure to provide that the Attorney General shall have the 
responsibility to correct such deficiencies. 

2. Congress should enact legislation:, 

(a) Amending section 703 of title 5 to allow the plaintiff 
to name as defendant in judicial review proceedings the 
United States, the agency by its official title, the appropriate 
officer, or any combination of them. 

(b) Amending section 1391 (e) of title 28 to include within 
its coverage actions challenging federal administrative action 
in which the United States is named as a party defendant, 
without affecting special venue provisions which govern other 
types of actions against the United States. 

(c) Amending section 1391(e) of title 28 to allow a plain- 
tiff to utilize that section's broadened venue and extraterri- 
torial service of process in actions in which non-federal de- 
fendants who can be served in accordance with the normal 
rules governing service of process are joined with federal 
defendants. 



34 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

RECOMMENDATION NO. 19 

SEC NO-ACTION LETTERS UNDER SECTION 4 OF THE 
SECURITIES ACT OF 1933 

The following recommendations concern the process by which 
the Division of Corporation Finance of the Securities and Ex- 
change Commission (the "Division") advises stockholders 
whether proposed sales of unregistered stock might involve a 
violation of the Securities Act of 1933 for which the Division 
would recommend Commission enforcement action. This no- 
action process is an outstanding example of administrative ac- 
cessibility and pragmatism, enabling stockholders readily to 
determine whether a contemplated sales transaction may be 
consummated without registration. The recommendations are 
intended to enable the public and individual stockholders to be 
more fully advised of the interpretations, policies and precedents 
which guide the conclusions of the Commission and the staff, 
and to encourage the Commission to relieve its staff of the 
burden of routine no-action requests., 

RECOMMENDATION 

1. Rule-Making. The Commission acting under 5 U.S.C. § 553, 
should to the maximum feasible extent state in the form of rules 
the legal interpretations, the policies, and the standards guiding 
discretion which it and the Division staff apply in determining 
registration obligations in the no-action process. Where general- 
ized rules are not feasible, the Commission should consider 
making rules limited to illustrative cases (involving either real 
or hypothetical facts) with an explanation of the reasons for 
their disposition. Existing summaries of past no-action letters, 
minutes of the Commission's disposition of those no-action re- 
quests which are brought before it, and related memoranda, 
insofar as they reflect current interpretative positions, should 
afford a strong and readily available foundation for such rule- 
making. 

2. Interpretative Releases. Where the formal rulemaking rec- 
ommended above may not be feasible, the Commission should 
to the maximum extent feasible make publicly available by the 
means of public releases its legal interpretations and policies, 
and standards guiding discretionary determinations. 

3. Past Interpretations. On questions of law or policy which 
are not answered in formal rules or releases, a selected group 
of the more important past no-action letters which may have 



OFFICIAL RECOMMENDATIONS 35 

continuing significance should be summarized and made publicly 
available. 

4. Routine Inquiries. As the Commission's rules, releases and 
particular interpretations become publicly available, the Com- 
mission should consider instructing its staff to discontinue giving 
no-action letters on routine questions adequately answered by 
publicly available material. 

5. Future No-Action Letters. The Commission and its staff 
should continue to issue no-action letters not excluded as routine 
under the limitation, suggested in .No. 4. Each non-routine letter 
should, in detail or in summary form as deemed appropriate, 
state the facts and the reasons for the conclusion. Each letter 
should be made publicly available, subject to safeguards deemed 
appropriate under No. 6. 

6. Confidentiality and Time of Publication. The Commission 
in making no-action letters publicly available should protect con- 
fidential information by the most effective and feasible means, 
including deletion, preparation of a "public" version of the letter, 
or reasonable delay in making the letter public. However, those 
letters which reflect significant developments in legal interpreta- 
tion, policy or standards guiding discretion, should be published 
promptly, subject to the necessary protection of confidentiality. 

7. Procedural Regulations. The present procedural regulations 
do not fully describe the no-action process and should be ex- 
panded to cover each step of the process. 

Separate statemeyit of Malcolm S. Mason. 

Government needs the art of making practical compromises 
between conflicting goals. There is a regrettable tendency to hold 
up administrative agencies to Olympian standards based on a 
theoretical pure strategy when a mixed strategy is called for. 
This operates to defeat the purpose of administrative procedure 
and the values to the public of administrative action. The Con- 
ference is hurrying too fast the process towards formalism 
which destroys both effectiveness and fairness. Every generation 
needs not only a measure of rational consistency but also the 
principle of Equity that stare decisis kills. 

The Securities and Exchange Commission no-action ietter is 
an outstanding creation in the field of administrative procedure 
by an agency that has been outstanding in its efforts to com- 
municate its views to the public affected. The Conference believes 
that the Commission can do better and I agree it can, but the 
conference has proposed a solution which in my view makes 
sure that it will do worse. 



36 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

The recommendation of the Conference if carried out will 
destroy the no-action letter for the valuable purpose for which 
it was created: quick, helpful, trustworthy guidance. If advice 
on particular matters must be accompanied by a public state- 
ment containing facts and reasons (as required by the Conference 
Recommendation, paragraph 5) and will be used as precedent, 
cautious statement and careful qualification is needed. The re- 
sult will be that the staff will no longer dare to give the quick 
and informal advice and assurance that they are now authorized 
to give. The people who need the assistance will no longer get it. 
A new piece of bureaucratic red tape will be created. An ex- 
isting effective and valuable informal procedure will be hurt. 
None of those who supported the recommendation intended this, 
but it will be the result. The Conference Recommendation does 
not reflect realistic consideration of how the no-action letter has 
operated in the past and how it will be likely to operate in the 
future. 

RECOMMENDATION NO. 20 
SUMMARY DECISION IN AGENCY ADJUDICATION 

Delays in the administrative process can be avoided by elimi- 
nating unnecessary evidentiary hearings where no genuine issue 
of material fact exists. Each agency having a substantial case- 
load of formal adjudications should adopt procedures providing 
for summary judgment or decision, patterned after the follow- 
ing model rule in suitable cases and with appropriate modifica- 
tions to meet the needs of its own hearings: 

RECOMMENDATION 

§ 1. Any party to an adjudicatory or rulemaking proceeding 
required by statute to be determined on the record after op- 
portunity for agency hearing may, after commencement of the 

proceeding and at least days before the date fixed for the 

hearing, move with or without supporting affidavits for a sum- 
mary decision in his favor of all or any part of the proceeding. 

Any other party may, within days after service of the 

motion, serve opposing affidavits or countermove for summary 
decision. The presiding officer may, in his discretion, set the 
matter for argument and call for the submission of briefs. 

§ 2. The presiding officer may grant such motion if the plead- 
ings, affidavits, material obtained by discovery or otherwise, or 



OFFICIAL RECOMMENDATIONS 37 

matters officially noticed, show that there is no genuine issue as 
to any material fact and that a party is entitled to summary 
decision. 

§ 3. Affidavits shall set forth such facts as would be admissible 
in evidence and shall show affirmatively that the affiant is com- 
petent to testify to the matters stated therein. When a motion 
for summary decision is made and supported as provided in this 
rule, a party opposing the motion may not rest upon the mere 
allegations or denials of his pleading; his response, by affidavits 
or as otherwise provided in this rule, must set forth specific 
facts showing that there is a genuine issue of fact for the hearing. 

§ 4. Should it appear from the affidavits of a party opposing the 
motion that he cannot for reasons stated present by affidavit 
facts essential to justify his opposition, the presiding officer may 
deny the motion for summary decision or may order a continu- 
ance to permit affidavits to be obtained or discovery to be had or 
may make such other order as is just. 

§ 5. The denial of all or any part of a motion for summary 
decision by the presiding officer shall not be subject to inter- 
locutory appeal to the (review authority) unless (a) the pre- 
siding officer certifies in writing (i) that the ruling involves an 
important question of law or policy as to which there is substantial 
ground for difference of opinion and (ii) that an immediate 
appeal from the ruling may materially advance the ultimate 
termination of the litigation; or (b) if the presiding officer de- 
clines so to certify, a designee of the (review authority) so 
certifies upon appropriate application. The allowance of such an 
interlocutory appeal shall not stay the proceeding before the 
presiding officer unless the (review authority) shall so order. 



RECOMMENDATION NO. 21 
DISCOVERY IN AGENCY ADJUDICATION 

Prehearing discovery in agency adjudication insures that the 
parties to the proceeding have access to all relevant, unprivileged 
information prior to the hearing. Its primary objectives include 
the more expeditious conduct of the hearing itself, the encour- 
agement of settlement between the parties, and greater fairness 
in adjudication. Agencies that conduct adjudicatory proceedings 
generally enjoy broad investigatory powers, and fairness requires 
that private parties have equal access to all relevant, unprivi- 
leged information at some point prior to the hearing. 



38 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

RECOMMENDATION 

It is therefore recommended that each agency recognize the 
following minimum standards for discovery in adjudicatory pro- 
ceedings subject to sections 5, 7 and 8 of the Administrative 
Procedure Act, nov^ codified as 5 U.S.C. 554, 556 and 557. In- 
dividual agencies may permit additional discovery where appro- 
priate and may tailor the recommended standards to meet the 
needs of particular types of proceedings where special or less 
elaborate discovery procedures will accomplish the same basic 
objectives or where the protective measures here recommended 
will be inadequate to achieve the ends sought. Each agency 
should undertake to train its hearing examiners in the applica- 
tion of the rules it promulgates to implement these standards. 
This training should draw upon the experience of other agencies, 
the Federal Courts, private practitioners, and bar associations. 

The recommended minimum standards include the following 
procedures : 

1. Prehearing Conferences 

The presiding officer should have the authority to hold one or 
more prehearing conferences during the course of the proceeding 
on his own motion or at the request of a party to the proceeding. 
The presiding officer should normally hold at least one prehear- 
ing conference in proceedings where the issues are complex or 
where it appears likely that the hearing will last a considerable 
period of time. The presiding officer at a prehearing conference 
should have the authority to direct the parties to exchange their 
evidentiary exhibits and witness lists prior to the hearing. Where 
good cause exists, the parties should have the right at any time 
to amend, by deletion or supplementation, their evidentiary ex- 
hibits and witness lists. 

2. Depositions 

A party to the proceeding should be able to take depositions 
of witnesses upon oral examination or written questions for pur- 
poses of discovering relevant, unprivileged information, subject 
to the following conditions: 

(1) the taking of depositions should normally be deferred 
until there has been at least one prehearing conference; 

(2) the party seeking to take a deposition should apply 
to the presiding officer for an order to do so ;, 

(3) the party seeking to take a deposition should serve 
copies of the application on the other party or parties to 



OFFICIAL RECOMMENDATIONS 39 

the proceeding, who should be given an opportunity, along 
with the deponent, to notify the presiding officer of any 
objections to the taking of the deposition ; 

(4) the presiding officer should not grant an application 
to take a deposition if he finds that the taking of the dep- 
osition would result in undue delay ; 

(5) the presiding officer should otherwise grant an ap- 
plication to take a deposition unless he finds that there is 
not good cause for doing so ; and 

(6) the deposing of an agency employee should only be 
allowed upon an order of the presiding officer based on a 
specific finding that the party applying to take the deposi- 
tion is seeking significant, unprivileged information not dis- 
coverable by alternative means. Any such order should be 
subject to an interlocutory appeal to the agency. 

An order to take a deposition should be enforceable through 
the issuance of a subpoena ad testificandum. 

3. Witnesses 

(a) Pri07' Statements — At the prehearing conference or at 
some other reasonable time prior to the hearing the attorney or 
employee appearing on behalf of the agency in the proceeding 
should make available to the other parties to the proceeding any 
prior statements of agency witnesses which are in the possession 
of the agency or obtainable by it from any other Federal agency 
and which relate to the subject matter of the expected testi- 
mony. "Statement" is defined to include only a written state- 
ment signed or adopted by the witness or a recording or tran- 
scription which is a substantially verbatim recital of an oral 
statement made by the witness to an agent of the Federal 
government. 

(b) Narrative Summaries of Expected Testimony — At the 
prehearing conference or at some other reasonable time prior to 
the hearing each party to the proceeding should make available 
to the other parties to the proceeding the names of the witnesses 
he expects to call and a narrative summary of their expected 
testimony. The attorney or employee appearing on behalf of the 
agency in the proceeding should have the authority to designate 
any prior statement or statements of an agency witness which 
he makes available to the other parties under Recommendation 
3(a) as all or part of the narrative summary of that witness' 
expected testimony. Where good cause exists, the parties should 
have the right at any time to amend, by deletion or supplementa- 
tion, the list of names of the witnesses they plan to call and the 



40 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

narrative summaries of the expected testimony of those 
witnesses, 

4. Written Interrogatories to Parties 

(a) AvailaUlity—A party to the proceeding should be able 
to serve written interrogatories upon any other party for pur- 
poses of discovering relevant, unprivileged information. A party 
served with interrogatories should be able, before he must answer 
the interrogatories, to apply to the presiding officer for the hold- 
ing of a prehearing conference for the mutual exchange of evi- 
dentiary exhibits and other information. Each interrogatory 
which requests information not previously supplied at a pre- 
hearing conference should be answered separately and fully in 
writing under oath, unless it is objected to, in which event the 
reasons for the objection should be stated in lieu of answer. 
The party upon whom the interrogatories have been served should 
serve a copy of the answers and objections within a reasonable 
time upon the party submitting the interrogatories. The party 
submitting the interrogatories may move the presiding officer for 
an order compelling an answer to an interrogatory or interroga- 
tories to which there has been an objection or other failure to 
answer. 

(b) Interrogatories Directed to the Agency — Each agency 
should designate an appropriate official on whom other parties 
to the proceeding may serve written interrogatories directed to 
the agency. That official should arrange for agency personnel 
with knowledge of the facts to answer and sign the interrogatories 
on behalf of the agency. The attorney or employee appearing 
on behalf of the agency in the proceeding should have the authority 
to make and sign objections to interrogatories served upon the 
agency. Interrogatories directed to the agency which seek in- 
formation available only from the agency head, member, or mem- 
bers should only be allowed upon an order of the agency based 
on a specific finding that the interrogating party is seeking sig- 
nificant, unprivileged information not discoverable by alterna- 
tive means. 

5. Requests for Admissions 

(a) Availability — A party to the proceeding should be able 
to serve upon any other party a written request for the admis- 
sion, for purposes of the pending proceeding, of any relevant, 
unprivileged facts, including the genuineness of any document 
described in the request, 

(b) Requests Directed to the Agency — Each agency should des- 



OFFICIAL RECOMMENDATIONS 41 

ignate an appropriate official on whom other parties to the pro- 
ceeding may serve requests for admissions directed to the agency. 
That official should arrange for agency personnel with knowl- 
edge of the facts to respond to the requests on behalf of the 
agency. The attorney or employee appearing on behalf of the 
agency in the proceeding should have the authority to make and 
sign objections to requests for admissions served upon the agency. 
Requests directed to the agency which seek admissions obtain- 
able only from the agency head, member or members should 
only be allowed upon an order of the agency based on a specific 
finding that the requesting party is seeking significant, unpriv- 
ileged information not discoverable by alternative means. 

6. Production of Documents and Tangible Things 

(a) From Non-Parties — A party to the proceeding should be 
able to obtain in accordance with agency rules a subpoena duces 
tecum requiring a non-party to produce relevant designated docu- 
ments and tangible things, not privileged, at a prehearing con- 
ference, at the taking of the non-party's deposition, or at any 
other specific time and place designated by the issuing officer. 

(b) From Parties — A party to the proceeding should be able 
to apply to the presiding officer for an order requiring any other 
party to produce and to make available for inspection, copying 
or photographing, at a prehearing conference or other specific 
time and place, any designated documents and tangible things, 
not privileged, which constitute or contain relevant evidence. The 
party seeking production should serve copies of the application on 
the other party or parties to the proceeding, who should be given 
an opportunity to notify the presiding officer of any objections. 
The presiding officer should order the production of such desig- 
nated documents and tangible things unless he finds that there 
is not good cause for doing so. 

(c) From the Agency — For the purposes of Recommendation 

6, the agency conducting the proceeding should be considered a 
party to the proceeding whether or not the agency staff partici- 
pates as a party to the proceeding. 

7. Role of the Presiding Officer 

(a) Control over Discovery — The presiding officer should have 
the authority to impose schedules on the parties to the proceed- 
ing specifying the periods of time during which the parties may 
pursue each means of discovery available to them under the rules 
of the agency. Such schedules and time periods should be set 



42 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

with a view to accelerating disposition of the case to the fullest 
extent consistent with fairness. 

(b) Interlocutory Appeals — Except as provided by Recom- 
mendation 2(6) above, an interlocutory appeal from a ruling 
of the presiding officer on discovery should be allowed only upon 
certification by the presiding officer that the ruling involves an 
important question of law or policy which should be resolved at 
that time by the appropriate review authority. Notwithstanding 
the presiding officer's certification, the review authority should 
have the authority to dismiss summarily the interlocutory appeal 
if it should appear that the certification was improvident. An 
interlocutory appeal should not result in a stay of the proceed- 
ings except in extraordinary circumstances. 

8. Protective Orders 

(a) Authority of Presiding Officer in General — The presiding 
officer should have the authority, upon motion by a party or by 
the person from whom discovery is sought, and for good cause 
shown, to make any order which justice requires to protect a 
party or person from annoyance, embarrassment, oppression, or 
undue burden or expense, including one or more of the following: 
(1) that the discovery not be had; (2) that the discovery may 
be had only on specified terms and conditions, including a desig- 
nation of the time or place; (3) that the discovery may be had 
only by a method of discovery other than that selected by the 
party seeking discovery; (4) that certain matters not be in- 
quired into, or that the scope of the discovery be limited to cer- 
tain matters; (5) that discovery be conducted with no one pres- 
ent except persons designated by the presiding officer; (6) that 
a deposition after being sealed be opened only by order of the 
presiding officer; (7) that a trade secret or other confidential 
research, development, or commercial information not be dis- 
closed or be disclosed only in a designated way; (8) that the 
parties simultaneously file specified documents or information 
enclosed in sealed envelopes to be opened as directed by the pre- 
siding officer. 

(b) Names of Witnesses — The presiding officer should have the 
authority upon motion by a party or other person, and for good 
cause shown, by order (a) to restrict or defer disclosure by a 
party of the name of a witness, a narrative summary of the ex- 
pected testimony of a witness or, in the case of an agency witness, 
any prior statement of the witness, and (b) to prescribe other 
appropriate measures to protect a witness. Any party aff'ected by 
any such action should have an adequate opportunity, once he 



OFFICIAL RECOMMENDATIONS 43 

learns the name of a witness and obtains the narrative summary 
of his expected testimony or, in the case of an agency witness, his 
prior statement or statements, to prepare for cross-examination 
and for the presentation of his case. 

(c) In Camera Proceedings— The presiding officer should have 
the authority to permit a party or person seeking a protective 
order to make all of part of the showing of good cause in camera. 
A record should be made of such in camera proceedings. If the 
presiding officer enters a protective order following a showing in 
camera, the record of such showing should be sealed and pre- 
served and made available to the agency or court in the event 
of an appeal. 

9. Subpoenas 

The presiding officer should have the power to issue subpoenas 
ad testificandum and duces tecum at any time during the course 
of the proceeding. Agencies affected by these Recommendations 
that do not have the statutory authority to issue subpoenas should 
seek to obtain any necessary authority from the Congress. 



RECOMMENDATION NO. 22 

PRACTICES AND PROCEDURES UNDER THE 
RENEGOTIATION ACT OF 1951 

RECOMMENDATION 

1. Criteria for Determining Excessive Profits 

The Renegotiation Board should publish in an appropriate 
form specific information describing the manner m which it 
applies each of the statutory factors. In the case of statutory 
factors for which the Board applies quantitative norms, a guide 
or statement specifically describing those norms should be pub- 
lished. In the case of statutory factors for which quantitative 
norms are not ordinarily applied, the Board should publish com- 
plete descriptions of the specific matters it has taken mto account 
in its application of these statutory factors and the relative im- 
portance it has given to such matters. In both cases, the infor- 
mation to be provided should, insofar as practicable, be cate- 
gorized by industry or other relevant grouping. 



44 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

2. Summaries of Facts and Reasons; Statements of Facts and 
Reasons 

The Renegotiation Board should improve the caliber of the 
Summary of Facts and Reasons and the Statement of Facts and 
Reasons furnished to a contractor. The Summary or Statement 
should contain a complete analysis and explanation of the manner 
in which the Board arrived at its determination and should re- 
flect the data in the Board's files upon which it has relied. This 
could be readily accomplished if Summaries and Statements were 
principally based upon the internal reports and memoranda con- 
tained in the Board's files in each case. Information concerning 
third parties which otherwise would be privileged or confidential 
upon which the Board has relied in reaching a determination 
should be included in a Summary or Statement of Facts and 
Reasons if the information can be disclosed without impairing 
its proprietary value or identifying its source. 

3. Performance Reports 

The Renegotiation Board should make available, upon request 
of a contractor, all reports it has received from procurement 
agencies and other parties relating to the contractor's perform- 
ance under contracts subject to renegotiation for the fiscal year 
under consideration. The Board should delete from such per- 
formance reports only those parts which either: (a) have been 
classified by the originating agency for reasons of national de- 
fense or foreign policy; or (b) contain information pertaining 
to third persons which is privileged or confidential and which 
federal law prohibits from being disclosed. 



TEXT OF COMMITTEE REPORTS IN SUPPORT OF 

RECOMMENDATIONS NOS. 1-22 OF THE 

ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 



RECOMMENDATION NO. 1 
ADEQUATE HEARING FACILITIES 

Administrative hearings of the Federal Government should be 
conducted in dignified, efficient hearing rooms, appropriate as to 
size, arrangement and furnishings. At the present time no central 
body is responsible for providing or planning the needed facilities. 
As a particular consequence, administrative hearings often have 
been conducted in surroundings unsuitable to the seriousness of 
these governmental proceedings. The General Services Adminis- 
tration could advantageously arrange for the service and the 
space needed by departments and agencies in v^^hich administra- 
tive hearings occur. 

RECOMMENDATION 

1. The General Services Administration should develop a set of 
four hearing room classifications explicitly identifying the features 
required with standards meeting at least the following minimum 
requirements. Such classifications should be developed in con- 
junction with representatives of the agencies, the bar, and ex- 
aminers. The minimum requirements should be: 

Type A — A formal conference room with table space for as 
many as 16 principals and additional seating for up to 20 
other persons. 
Type B — A small hearing room with a raised dais, a witness 
box, a reporter's table, table space for as many as six 
counsel, and additional seating for up to 30 others. The 
design and furnishings should be appropriate to a hearing 
which is judicial in nature and should include wherever 
possible an auxiliary room in which counsel may confer 
with their clients, witnesses may be sequestered, etc. 
Type C — A large hearing room accommodating as many as 
30 counsel at tables and up to 70 witnesses and spectators. 
This room should have the design and furnishings which 
are appropriate to formal hearings of a judicial nature. 

45 



46 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

Type D — An auditorium suitable for hearings of general 

public interest which might attract over 100 principals and 

spectators. 

An essential requirement of each of the four types of hearing 

rooms should be a small, nearby room available to the examiner 

as his office and for such other uses as he designates. 

2. The General Services Administration should prepare and 
maintain on a current basis an inventory which (a) identifies 
available hearing facilities throughout the country, classified 
under the system recommended in 1 above, including hearing 
rooms permanently assigned to particular agencies as well as 
courtrooms (local. State, and Federal), (b) identifies the GSA 
regional offices, local building managers, and others through 
whom such space can be obtained, and (c) provides information 
concerning the procedures to be followed to obtain space through 
the GSA for the conduct of hearings. 

3. The General Services Administration should establish pro- 
cedures for determining the frequency and location of adminis- 
trative hearings which require facilities of each type within the 
system of classification recommended above in order to determine, 
by city, whether a permanent hearing room for multiagency 
use can be justified. A permanent hearing room should be con- 
sidered justified wherever there is a continuing need of approxi- 
mately one-fourth of the available working days. 

4. The General Services Administration should provide for the 
administration and scheduling of permanent multiagency hear- 
ing facilities under the direction of GSA's Washington head- 
quarters, but subject to such decentralization as the functions of 
inventorying, procuring, and planning may require. 

5. The General Services Administration should establish a pro- 
cedure for the systematic reporting, to the respective agency 
and to GSA, of deficiencies in assigned facilities discovered by 
presiding officers, and for the investigation and correction of 
such deficiencies. 

6. The General Services Administration should establish an 
advisory committee of members of the bar and other interested 
professional, associations, agency representatives, and members 
of the public to facilitate the evaluation of present and future 
needs and to report annually to the Administrative Conference 
on its activities. 

7. Permanent multiagency hearing rooms and hearing rooms 
permanently assigned to individual Federal agencies should be 
identified as "Federal Administrative Hearing Rooms." 



REC. 1. HEARING FACILITIES 47 

8. The Chairman of the Administrative Conference should en- 
courage the cooperation of State and local judges in the pro- 
curement of courtroom space for Federal administrative hearings. 

9. The Judicial Conference of the United States should en- 
courage the cooperation of Federal judges in the procurement of 
courtroom space for Federal administrative hearings. 

10. Federal agencies should budget funds to provide for the 
payment of charges for the use of appropriate space when such 
space is not available on a free basis. 

11. Federal agencies which conduct administrative hearings 
should designate an official to work with the General Services 
Administration in the procurement and planning of hearing 
facilities. 



REPORT OF THE COMMITTEE ON PERSONNEL 
IN SUPPORT OF RECOMMENDATION NO. 1 

Prepared by 
Robert E. Park 
Professor of Law 
George Washington University 



The Committee on Personnel has been charged by the Adminis- 
trative Conference of the United States with responsibility for 
conducting studies to determine how the professional skills and 
effectiveness of Government personnel can be enhanced. 

The Committee chose as its first study the question of whether 
adequate hearing room facilities are available for Federal agencies 
and departments. 

To determine the extent to which there is a present need for 
improved facilities, the Committee has conducted two surveys 
of agencies ; held an informal meeting between the General Serv- 
ices Administration, the Committee, representatives of the 
agencies and departments, and representatives of the various 
professional and bar associations; and conducted two days of 
public hearings. 

Responses to the agency surveys, comments at the informal 
meeting and numerous contacts with individual Examiners, law- 
yers and agency officers and testimony at the hearing reveal that 
for some agencies the inadequacies are chronic, disruptive and 
demeaning to the authority and effectiveness of the agency. 

The complaints tend to be directed toward three general prob- 
lems: 

(a) a scarcity in some cities of suitable spaces ; 

(b) a procurement system that is unfamiliar, inefficient, 
misunderstood or cumbersome to employ ; and 

(c) a lack of understanding of the quasi-judicial char- 
acter of many administrative proceedings and the need for 
a courtroom design for adversarial proceedings. 

The problem of adequacy of hearing room space tends to be a 
problem of obtaining space in the field. On the whole, agencies 
report that their Washington spaces are adequate to very satis- 

48 



REC. 1. HEARING FACILITIES 49 

factory and, to a much lesser degree, that spaces provided for 
hearings at their regional offices tend to be satisfactory. The 
agencies reporting the most extensive problems are those en- 
gaged in large numbers of field hearings, particularly: 

Interstate Commerce Commission (FY 68) 1,693 field hearings 

Department of the Interior (FY 68) -.. 1,590 field hearings 

National Labor Relations Board (FY 68) 3,100 field hearings 

Social Security Administration (FY 68) __. 24,700 (est.) field hearings 

That the problem may be only an occasional one for agencies 
normally holding their hearings in Washington or in regional 
offices does not diminish the significance of the particular occasion. 
The damage done to the parties and to the public interest when 
a major regulatory agency such as the Federal Power Commission 
is reduced to obviously inferior and makeshift facilities must 
seriously concern everyone who values or must rely upon the ad- 
ministrative process. That the Federal Power Commission only 
held five hearings outside of Washington in Fiscal Year 1968 
does not diminish the importance of those five hearings. 

The problem is not limited to agencies requiring hearing space 
in the smaller cities. Your committee has received complaints of 
difficulties resulting from inadequate hearing rooms, occurring 
within the last two years, in the following major cities: Colum- 
bus, Ohio; Dallas, Texas; Birmingham, Alabama; Miami, Florida; 
New Orleans, Louisiana; Seattle, Washington; Philadelphia, 
Pennsylvania; Pittsburgh, Pennsylvania; Norfolk, Virginia; De- 
troit, Michigan ; Cincinnati, Ohio ; and Houston, Texas. 

With the construction of additional Federal office buildings, 
such as new facilities in Boston, the problem has been somewhat 
diminished in some cities. Approximately one quarter of the 
agencies responding to the survey indicated that the availability 
or the quality of space, or both, had improved perceptibly in the 
last several years. But this slight improvement may soon be 
overshadowed by a substantial expansion in the next few years 
in the use of hearings and by the increasing size of the crops of 
Examiners. 

The General Services Administration, through its Planning 
and Utilization Division, is exceedingly interested in facilitating 
the procurement of space in Federal and non-Federal buildings 
throughout the country. The regional officers and local officers 
of the General Services Administration off'er the agencies the 
advantage of a greater familiarity with local facilities than local 
agency representatives are likely to have. It offers the total ad- 
ministrative system the advantage of a single source of procure- 



50 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

ment, avoiding the harassment or confusion of local volunteers 
of space by appeals from a multiplicity of agencies. 

The General Services Administration has indicated its willing- 
ness to provide permanent hearing room facilities in those cities 
where shared use by Federal agencies and departments would 
justify such assignment. The General Services Administration 
has indicated, also, that it would not apply the normal utiliza- 
tion minimum for justification of at least some use on at least 
50% of the days, but would apply a more relaxed requirement 
similar to that used to evaluate the need for courtroom facilities. 
The G.S.A recognizes that the character of the use for such fa- 
cilities makes constant use unlikely. For example, in its Occupancy 
Guide for G.S.A officers providing space for the Interstate Com- 
merce Commission, G.S.A. notes, "Whenever a continuing need 
for hearing rooms approximates one-fourth of the available work- 
ing days or more, a room suitable for conducting hearings should 
be provided and made available to the Commission on a perma- 
nent basis." 

The agencies have not, however, made very great use of the 
procurement services of the General Services Administration. 
Only three agencies reported obtaining as much as 25% of their 
"outside Washington" hearing spaces through the General Serv- 
ices Administration. There appear to be three reasons for this: 

(a) The agencies may believe that there simply is no 
space available, to G.S.A. or anyone else; 

(b) The agencies may have found the G.S.A procedures 
inconvenient, cumbersome or unproductive in the past, and/ 
or feel that their examiners can more readily obtain space 
through the local bar or local agency representatives; or 

(c) The agencies may feel that G.S.A. representatives do 
not understand the quasi-judicial character of the proceed- 
ings and cannot be relied upon to obtain appropriate space. 

Much of the shopping about for space appears to be impelled 
by policies prohibiting the expenditure of funds upon hearing 
spaces when free space can be obtained. While a reasonable 
search for free space may promote the better utilization of Fed- 
eral and state facilities, the direct money savings should not be 
allowed to force agencies into improvised or demeaning spaces 
that compromise the integrity of the proceeding and the dignity 
of the process. The picture painted by complaints received by 
your Committee of Examiners forced into crowded basement 
rooms. Civil Service examination rooms complete with black- 
boards and school desks, storage rooms, minimally furnished 



REC. 1. HEARING FACILITIES 51 

conference rooms, etc., makes a sad spectacle of the Federal ad- 
ministrative process. 

It is important to recognize that the words "hearing room" 
do not mean the same to every agency, Examiner or General 
Services Administration representative. In their survey responses, 
agencies indicated individual variations as to the exact features 
needed in their hearing spaces. The following five types of spaces 
with total hearing room days of occupancy for Fiscal Year 1968 
for all responding agencies indicate the most general types of 
spaces required by the agencies : 

Type A — A formal conference room with table space for up 
to 16 principals and additional seating for up to 20 
others. (Days of use: In Washington, 208; in the field, 
13,806. Principal user: Ofl!ice of Economic Opportunity, 
13,465 field hearings.) 
Type B — A small hearing room with a raised dais, a wit- 
ness box, a reporter's table, table space for up to 6 counsel 
and additional seating for up to 30 others. The design and 
furnishings would be those appropriate to a small court- 
room. (Days of use: In Washington, 450; in the field, 
379.) 
Type C — A room identical to Type B but with additional 
auxiliary rooms, normally an ofl^ce for the Examiner or 
for the use of counsel and a room for sequestering wit- 
nesses. (Days in use: In Washington, 1,128; in the field, 
17,649. Principal users: In the field, N.L.R.B. with 3,450 
adversarial hearings and 1,960 representation proceed- 
ings, and Health, Education and Welfare with 12,000 
(est.).) 
The N.L.R.B. reports a need for a third auxiliary room in 

its adversarial hearings. 
Type D — A large hearing room accommodating up to 30 
counsel at tables and up to 70 witnesses and spectators. 
This room, too, would be designed and furnished in the 
style of a courtroom, but would not provide auxiliary 
rooms. (Days of use: In Washington, 648; in the field, 
54.) 
Type E — An auditorium appropriate for large proceedings 
which might attract over 100 parties, spectators, etc. 
(Days of use: In Washington, 64; in the field, 107.) 
Two comments should be made in regard to this data. First, 
the data is based upon approximations and estimates of agencies 
as to what would have been the appropriate facility. Thus, an 
N.L.R.B. hearing actually held in a conference room, but for 



52 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

which the agency feels a TYPE C facility was needed, was counted 
under Type C. Second, this data is based upon 23 agencies re- 
sponding as of November 1, 1968. The data should not be used, 
therefore, to evaluate the justification for the permanent assign- 
ment of field facilities, but should be used to obtain some idea of 
the relative demand among the various types of space. 

This differentiation as to type of facility immediately suggests 
the need for two steps to optimize the procurement procedure. 
First, there is a need for a detailed inventory of available spaces 
by type. Second, there is a need for the formulation of explicit 
specifications by type so that those providing space, those pro- 
curing space, and those requesting space may reliably refer to 
the same type of hearing room. A step in this direction has 
already been accomplished by the preparation by the General 
Services Administration of Occupancy Guides, in which general 
hearing room requirements of a specific agency are described for 
the regional offices of G.S.A. The G.S.A. has indicated that they 
intend "to continue the study of your requirements and to fur- 
ther improve this Guide whenever possible," so such a step con- 
forms to G.S.A.'s own interest in specification of standards. The 
Occupancy Guide descriptions are at present somewhat vague. 
There is not sufficient detail to give a regional officer of G.S.A. 
an idea of the quasi-judicial atmosphere that is required, of the 
particular need for the Examiner to see and hear the witness 
easily, of the need for a separation of the witness to impress 
upon him the significance of his participation and testimony, of 
the table space requirements of counsel and expert witnesses in 
complicated, economic proceedings, or of the many other require- 
ments peculiar to an administrative hearing that agencies en- 
gaged in general conferences or meetings do not have. It is clear 
that many of the spaces offered, accepted and then found inade- 
quate by Examiners would not have been considered had all 
parties fully understood the particular requirements of an ad- 
versarial hearing on the one hand and the particular character- 
istics of the space being offered on the other. A set of explicit 
specifications would reduce the incidence of such misunder- 
standings. 

A recurring concern of the agencies and of the Examiners is 
that the quasi-judicial character of the administrative hearing be 
recognized and weighed in the definition of appropriate space. 
To this end, it has been repeatedly suggested to the Committee 
that it would be helpful in fixing the appropriate image in the 
minds of administrative officers and other laymen involved in 
the procurement of space if the hearing rooms were specifically 



REC. 1. HEARING FACILITIES 53 

labeled "Administrative Courtroom." Although of minimal cost, 
such a step would appear to be useful in establishing the char- 
acter of the proceeding. 

The Committee found especially significant the support which 
the bar and professional associations provided the agencies and 
Examiners in their efforts to obtain more appropriate hearing 
spaces. The Hearing Examiner Committee of the Administrative 
Law Section of the American Bar Association has approved the 
standards unanimously adopted by the Federal Trial Examiners 
Conference in May, 1968, and has approved a resolution on this 
topic for submission to the Section Council. See Attachment A. 
The Federal Trial Examiners Conference standards are attached 
as Attachment B. The Federal Bar Association Committee has 
indicated its strong support, as have other bar associations. 

The Committee has received several reports that complaints 
have been made to N.L.R.B. Examiners by counsel objecting to 
having hearings in N.L.R.B. spaces. An inquiry was therefore 
directed to other agencies to determine whether there had been 
other instances of such complaints, directed at improprieties or 
the appearance of undesirable ex parte contacts between Exam- 
iners and staff attorneys. Although nineteen other agencies re- 
ported conducting hearings in or immediately adjacent to their 
offices, no other agency reported receiving such complaints. Only 
two others indicated a belief that a physical separation would be 
desirable or necessary. A number of the agencies volunteered 
the observation that the accessibility of such an arrangement 
was important to the efficient conduct of agency business, and 
one indicated that industry counsel appeared to prefer the ar- 
rangement. At the informal meeting arranged by the Committee, 
several participants indicated that when possible their agencies 
made a positive attempt to separate hearings from their office 
spaces, but this was not reflected in the survey responses. This 
is a matter that can probably be best determined by each agency 
for itself. Certainly no general rule can be imposed without risk- 
ing serious interference with agency efficiency and there is no 
evidence that a general rule is needed or would be practical. 

Of fifteen agencies responding to a survey item inquiring 
whether they had any formal reporting procedure for the con- 
tinuing evaluation of the adequacy of hearing rooms, only one 
agency said that it had such a procedure, the Interstate Com- 
merce Commission. The form utilized for this purpose by the 
Interstate Commerce Commission is herewith attached as At- 
tachment D. A device for collecting specific reports of deficiencies 
in facilities might well be more widely used to inform both the 



54 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

agencies and the General Services Administration. The represent- 
ative of the General Services Administration indicated at the 
informal meeting arranged by your Committee that it would very 
much like to have the regular feedback of information as to 
problems encountered by administrative agencies in arranging 
for hearing rooms. 

The procedures by v^^hich agencies obtain information as to 
the availability of space vary from agency to agency. Most agen- 
cies rely most heavily upon their field officers. The Federal Trade 
Commission, for example, w^orks from lists compiled by its field 
offices and from the Register Department of Jtistice and the 
Courts of the United States. The Interstate Commerce Commis- 
sion assigns responsibility to the Office of the Secretary, Section 
of Records and Service, which works from a list of Federal facil- 
ities available by cities in each ICC Region. In some cases 
agencies go to the General Services Administration with a re- 
quest for a specific courtroom or hearing room, sometimes with 
a general request for space. Most commonly, however, the agency 
or Examiner goes directly to the managers of identified space 
and negotiates directly with them for the use of the space. This 
bypassing of the General Services Administration is regarded by 
several agencies as more efficient and reliable, but it may reduce 
G.S.A.'s awareness of the agency's need and it may fail to develop 
for the agency information as to the full range of space available 
in a particular city. 

When each agency was asked if the agency would be interested 
in participation in a permanent space committee of agency rep- 
resentatives, GSA officials, and members of the administrative 
bar to overview the hearing facilities problem, approximately half 
indicated that they would not. Approximately half indicated that 
they would. The Committee feels that such an advisory committee 
would prove useful to G.S.A. and the participating agencies. 

Approximately half of the agencies indicated that they had 
space permanently assigned in Washington or in field locations 
or both for their exclusive use as hearing rooms. These agencies 
indicated that such spaces were heavily utilized and that it was 
normally impracticable for them to be made available to other 
agencies on a regular basis. When such space is free, however, 
it should be made available to other agencies for non-conflicting 
use. 



REC. 1. HEARING FACILITIES 55 

ATTACHMENT A 
Resolution 

Whereas, by resolution of the Board of Governors of the American Bar 
Association, as approved by its House of Delegates, the Section of 
Administrative Law has bsen directed, on behalf of the Association, by all 
necessary and proper means, to preserve the gains made by the adoption of 
the Administrative Procedure Act as the law of the land, and 

Whereas one of the objectives of the Administrative Procedure Act was 
and is to improve and enhance the standing and stature of Hearing Ex- 
aminers, and 

Whereas the Council of the Section of Administrative Law is concerned with 
the physical conditions under which Hearing Examiners perform their duties 
and believers that the facilities afforded to them have a direct bearing on their 
standing and stature, whether such facilities be viewed by agency personnel 
or the public. 

Now therefore be it 

Resolved that the Section of Administrative Law urges the Federal 
Government to provide Hearing Examiners with office facilities and 
supporting personnel suitable to the discharge of their judicial function and at 
least equivalent to those of professional legal personnel of like Civil Service 
Grade within the same agency and which assure requisite privacy and confi- 
dentiality, and 

Resolved further that the Section of Administration Law indorses in prin- 
ciple the "Standards for Federal Hearing Examiner Office Space, Equipment, 
Supplies, Facilities and Staff" adopted by the Federal Trial Examiners 
Conference on March 7, 1968, to the extent they refer to the foregoing, and 

Resolved further that the Hearing Examiners Committee be assigned re- 
sponsibility for conveying these views to any Government department or 
agency which fails to provide Hearing Examiners with accommodations 
consistent with these standards. 



ATTACHMENT B 

Hearing Facilities Required for Federal Administrative Proceedings 
(Standards Adopted by Federal Trial Examiners Conference, May 1968) 

1. GENERAL GUIDING PRINCIPLES 

A. Nature of facilities should be commensurate with type of proceeding. 
1. Courtrooms for trial of all adversary proceedings. 

(a) Courtroom and accessory facilities should be that of, or equiv- 
alent to that of, United States District Court or highest State court 
of original (i.e., trial) jurisdiction. 

(b) Courtroom of U.S. Referee in Bankruptcy is adequate in 
those cases where it in fact provides facilities reasonably sufficient 
for the number of counsel and witnesses. 

(c) Auxiliary courtrooms (or Federal Administrative Court- 
rooms) — if feasible, with the facilities usually connected therewith 



56 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

(e.g., private office, counsel room, and witnesses room) — should be 
provided in all Federal buildings and courthouses wherever possible, 
for use by Federal Trial Examiners when courtrooms of United 
States District Court and Referee in Bankruptcy are not available. 
2. Small court or conference rooms for nonadversary proceedings. 

(a) Adequate in size, considering needs of counsel (if any) and 
the number of witnesses. 

(b) Should ensure impression that a formal Government proceed- 
ing is being conducted. 

(c) Must not reflect discredit upon the U.S. Government or place 
the Federal administrative process in disrepute. 

B. Except at an agency's headquarters, trial of administrative proceedings 
should not be conducted in premises of the agency. 

C. Procurement of courtrooms for trial of Federal administrative proceed- 
ings should be the responsibility of General Services Administration. The 
cooperation of the Administrative Office of the United States Court and the 
Department of Justice should be obtained in the implementation by General 
Services Administration of these Standards. 

D. Responsibility within the agency itself for ensuring compliance with 
these Standards should be lodged in the agency's Chief or senior Trial Ex- 
aminer, and not in investigating, prosecuting, administrative, or other per- 
sonnel of agency. 

II. SPECIFICATIONS FOR FEDERAL ADMINISTRATIVE COURT- 
ROOM FACILITIES 

A. Existing Federal Facilities {Non-Agency) 

1. Where Federal courtrooms are not in use for judicial proceedings, 
they should routinely be made available, upon request, for use by Federal 
Trial Examiners for adversary Federal administrative trials. 

2. Where Federal courtrooms are not available. General Services Ad- 
ministration should provide (by lease or otherwise) for use of State, 
county, or local courtrooms and accessory facilities. 

3. Order of preference : 

(a) Courtroom of United States District Court. 

(b) Courtroom of U.S. Referee in Bankruptcy (or, when provided. 
Auxiliary Courtroom or Federal Administrative Courtroom). 

(c) Courtroom of State court of highest original (i.e., trial) 
jurisdiction. 

(d) County courtroom. 

(e) Local (e.g., city) courtroom. 

4. Facilities normally available to trial court judge (private office 
and lavatory) should routinely be made available to the Federal Trial 
Examiner together with the courtroom. 

5. Federal Trial Examiners should be charged with enforcement of 
rules of decorum (e.g., no smoking) locally applicable to the particular 
facilities. 

6. When constructing or furnishing Auxiliary Courtrooms of Federal 
Administrative Courtrooms in existing Federal Buildings, Federal Court- 
houses, and Post Office Buildings, the courtrooms should be the same as 
or comparable to the United States District Courtroom, except the spec- 



REC. 1. HEARING FACILITIES 57 

tator section may be smaller. All other facilities normally connected with 
District Courtroom (office with private lavatory, counsel room, and wit- 
nesses room) should be provided. 

B. Federal Facilities (Non-Agency) under Construction or Projected — 
All planned or projected new Federal building facilities, as well as those 
where space is available, housing a Federal courtroom (and also those not 
housing a Federal courtroom, where space is available and a need for regu- 
lar use exists) — e.g., Federal Courthouses, Federal Buildings, Federal 
Complexes, Federal Centers, Post Office Buildings — should contain one or 
more Auxiliary Courtrooms or Federal Administrative Courtrooms, ap- 
proximately equivalent to United States District Courtrooms, except the 
spectator section may be smaller; including, as part thereof, a private office 
with lavatory for the Federal Trial Examiner, a counsel room, a witnesses 
room. 

Note: In this connection, see, e.g., "Symposium" Courthouses and Court- 
rooms," Judicature (Journal of the American Judicature Society), Octo- 
ber-November 1966, for examples of modern courtroom design. 

C. Agency Facilities 

1. Except at an agency's headquarters, adversary Federal adminis- 
trative trials should not be conducted on the premises of the agency it- 
self, unless absolutely essential because no other facility is available. 

2. In those instances where adversary Federal administrative trials 
cannot be conducted elsewhere, the trial facilities shall in all cases com- 
ply with acceptable operational standards (e.g., bench on dais, proper 
Reporter's facilities, witness box or chair at a reasonable distance from 
the Federal Trial Examiner and counsel, counsel tables of adequate size, 
adequate space and configuration of furniture to permit note-taking and 
consultation with clients and witnesses, and private office for the Federal 
Trial Examiner). 



RECOMMENDATION NO. 2 
U.S. GOVERNMENT ORGANIZATION MANUAL 

The manual at present falls short of its goal because the narra- 
tive text submitted by some of the agencies is outdated, unreveal- 
ing, cumbersome, or otherwise deficient. The text should be 
rewritten at a high level of competence. 

RECOMMENDATION 

1. Each agency covered by 5 U.S.C. 552 should assign the 
writing of material for the "U.S. Government Organization Man- 
ual" to an office having the competence to achieve the brevity, 
clarity, and general excellence of presentation required to serve 
the purpose of this handbook and to reflect credit on our govern- 
ment. 

2. Included in the description of each agency should be infor- 
mation concerning the means by which more detailed knowledge 
of the agency's organization and functions may be obtained. 



58 



REPORT OF THE COMMITTEE ON INFORMATION. EDU- 
CATION, AND REPORTS IN SUPPORT OF RECOMMEN- 
DATION NO. 2 



The Committee on Information, Education, and Reports sub- 
mits that the U.S. Government Organization Manual should be 
a compact reference handbook designed to guide the user to 
effective initial contact with out Federal government, and that 
this Manual should, by the excellence of its presentation, reflect 
credit on the government and the Republic. Consonant with the 
accompanying report your Committee finds that the Manu/il can- 
not achieve these high standards under present procedures; that 
the principal faults lie in the narrative text submitted by the 
agencies; and that correction of these faults will require rewrit- 
ing the text at the highest level of competence afforded by the 
submitting agency. 

I. Background 

The "Daily Revised Manual of Emergency Agencies and Facil- 
ities" of 1934, forerunner of the present United States Govern- 
ment Organization Maniuxl, was limited to the activities of New 
Deal agencies. The format was broadened later to provide infor- 
mation on all phases of Government organization and activities. 
The Manual sought to meet the needs of libraries as a part of 
their basic reference works in Government; of colleges, universi- 
ties, and secondary schools as textbooks or as corollary reading; 
of legal and professional groups, and of Federal agencies, for 
use of their personnel. 

For a considerable period after its creation the Manual was a 
model Baedeker. Clearly written, compact, and well organized, 
it served the needs of citizens seeking help in threading the 
bureaucratic maze. But though updated annually it was never 
revised, and it gradually lost the qualities that had made it 
excellent. Subjected to frequent, piecemeal amendments, the prod- 
uct of a generation of ever-changing agency writers who bor- 
rowed more and more heavily from job descriptions and other 
papers intended for internal agency use, the Manual became more 
difficult to use. 

Today it is foundering in a polysyllabic sea of Federal prose — 

59 



60 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

a handbook that is no longer handy, a guidebook in need of a 
guide. Unless means are found to reverse present trends, the 
Manual will continue to sink into a state of increasingly limited 
usefulness. 

II. Findings 

The Committee on Information, Education, and Reports be- 
lieves that the time has come for complete revision of much of 
the text, for rev^'riting "from scratch" of the descriptions of 
many of the older agencies. 

The Manual is neither a directory nor an internal management 
manual. In its ideal form, it should provide basic information 
on the organization and functions of all agencies with emphasis 
on bureaus or divisions with which members of the public can 
be expected to deal. 

This goal demands brevity and simplicity. The user should 
not be subjected to extraneous matter couched in job-sheet lan- 
guage and paragraph-long sentences (see for example pages 67, 
92, 134, 135, 194, 369 of the 1968-1969 edition). Material re- 
lating to the internal operations of agencies such as that on 
page 106 should be eliminated, thereby giving needed space for 
the inclusion of more newly created governmental units without 
swelling the Manual to cumbersome size. Descriptions of offices 
dealing with management, data processing, etc., abound in the 
Manual (see pages 92, 93, 106, 116, 182-184, 243, 297, 393, 476, 477, 
548, 569). The space devoted to such units should be greatly 
reduced or eliminated entirely. 

The usefulness of the Manual would be further increased if 
the oldline departments would follow a uniform pattern of confin- 
ing the narrative text to descriptions of the operating bureaus 
and divisions where programs vis-a-vis the public are actually 
carried out. Space allotted to outlining the responsibilities of 
Under Secretaries, Assistant Secretaries, and other individuals 
results in unnecessary repetition and confusion (e.g. pages 133, 
242, 302, 303, 353). Personnel listings and organization charts 
illustrate adequately a department's lines of authority. 

III. Conclusions 

The gradual deterioration of the Manuul has taken place in 
spite of efforts on the part of the editors to rejuvenate it. The 
limited but able Federal Register staff has prepared a "Handbook 
on Document Drafting" Chapter II of which is entitled "How to 
Prepare Manuscript for the U.S. Government Organization Man- 



REC. 2. ORGANIZATION MANUAL 61 

ual." This material is used in training sessions for agency per- 
sonnel and the pertinent text is distributed each year as work on 
a new edition of the Manual begins. But at best these actions 
have merely retarded the rate of decline. 

The problem in its simplest terms is one of leadership within 
the contributing agencies. In a period characterized by ever 
greater emphasis on the public's right to know, many agencies 
have been unwilling to assign top talent to the Manual, despite 
substantial expenditures for information functions. 

More often than not the work has been delegated to sub- 
ordinate personnel or used as a training medium for new em- 
ployees at the entrance grade. There is an understandable hesi- 
tancy on the part of such employees to see the problem from the 
public's point of view and to delete or reduce material which is 
of importance chiefly within the agency. 

Under present conditions it is difficult, possibly even unfair, 
for the Federal Register editors working on the Manual to de- 
mand that some agencies limit the length of new material — 
which may be valuable — because others jealously retain space for 
years to describe obsolescent functions or to trace the history of 
present operations. 

The experience of many years has convinced the Federal Regis- 
ter staff that the drafting of concise and informative statements 
of agency functions, projects, programs, and services should be 
the work of qualified agency staff members — employees at the 
highest level of competence, fully clothed with authority to act. 
The Committee on Information, Education, and Reports concurs 
in this conviction. 



RECOMMENDATION NO. 3 

PARALLEL TABLE OF STATUTORY AUTHORITIES 
AND RULES (2 CFR CH. I). 

The Parallel Table of Statutory Authorities and Rules (2 CFR 
ch. I) should be an accurate and complete listing of United 
States Code provisions cited as rulemaking authority in executive 
agency documents which prescribe general and permanent rules. 
The present Parallel Table is deficient. Agencies have not given 
sufficient time and attention to citing proper authorities and to 
keeping them current. Moreover, the Table's present method of 
preparation leads to omission of relevant references. 

RECOMMENDATION 

1. Each agency covered by 5 U.S.C. 552 should review all of its 
rules published in the Code of Federal Regulations to determine 
if the cited rulemaking authorities are complete, accurate, and 
current. The Conference requests that formal documents correct- 
ing deficient citations be submitted to the Office of the Federal 
Register for publication in the daily "Federal Register." 

2. The Office of the Federal Register should take the steps 
necessary to broaden the coverage of the Table to include per- 
tinent citations in preambles and in codified text as well as those 
in the formal statements of authority. 



62 



REPORT OF THE COMMITTEE ON INFORMATION, EDU- 
CATION, AND REPORTS IN SUPPORT OF RECOMMEN- 
DATION NO. 3 



The Committee on Information, Education, and Reports sub- 
mits that the Parallel Table of Statutory Authorities and Rules 
(2 CFR Ch. I) should be an accurate and complete listing of 
United States Code provisions cited as rule-making authority in 
Executive agency documents which prescribe general and per- 
manent rules. The Committee finds that the Parallel Table is 
deficient as an accurate and dependable finding aid because (1) 
agencies have not given sufl!icient time and attention to citing 
proper authorities and to keeping them current; and (2) the 
Table's coverage is not broad enough to include useful citations 
now lost under present methods of preparation. 

I. Background 

The Parallel Table was originally designed to lead the legal 
researcher from the enabling act in his hand to the resultant 
reglation in the Code of Federal Regulations. The Table is based 
on the requirement of the Administrative Committee of the 
Federal Register that every agency rule must be covered by a 
citation to the authority under which the provisions are issued, 
which reads as follows :, 

§ 17.45 General requirements. 

Each section in a document subject to codification shall 
include, or shall be covered by, a complete citation of the 
rule-making authority under which the provisions of the 
section are issued, including (a) general rule-making author- 
ity delegated by statute, (b) specific rule-making authority, 
if any, delegated by statute, and (c) executive delegations, 
if any, necessary to link the statutory authority to the 
issuing agency. 
In the early days of the Federal Register when agency writers 
and their counsel were just learning how to draft Federal Register 
documents, the Federal Register Office employed a staff of at- 
torneys whose primary function consisted of reviewing agency 
documents. Part of this review involved verifying authority 

63 



64 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

citations and calling the agency when a citation was in error or 
incomplete. By 1960, the volume of published rules had increased 
beyond the means of the small Federal Register staff. In addition 
to this, it was reasonable to assume that the issuing agency was 
now in a much better position to know what laws it was imple- 
menting and how to cite them. Consequently the Federal Register 
regulations were amended by adding the following section under 
the heading "Citations of Authority" : 

§ 17.46 Agency responsibility; amendments. 

The accuracy and integrity of citations of authority are 

the responsibility of the issuing agency. Such citations shall 

be formally amended by the issuing agency to reflect changes 

in authority. 

Now without benefit of the close review of authorities by the 

Federal Register staff, the general counsel of every agency was 

expected to be extremely careful in providing the correct authority 

citations and keeping them current. The Federal Register Office 

continued to provide assistance to small agencies which have no 

general counsel and to others on request. 

To prepare the Parallel Table, Federal Register editors search 
the agency rules and list all United States Code provisions appear- 
ing in the authority citations. Authorities consisting only of 
public law number on U.S. Statutes at Large citations are 
changed to the parallel United States Code reference when possi- 
ble. The Table is published annually as Chapter I of Title 2 of 
the Code of Federal Regulations. Additions to the Table are 
printed monthly at the end of the "List of CFR Sections Af- 
fected," a supplementary guide to the daily Federal Register. 

U. Findings 

The accuracy of a citation is the issuing agency's responsibil- 
ity; thus the reliability of the Table depends primarily on the 
care the agency takes to present and keep current the proper 
citations of authority for every provision promulgated. The de- 
gree of care has varied beyond acceptable limits. A spot check 
of the Table revealed many questionable entries. One citation 
may be so general that it is of little help to the researcher (see 
18 CFR Part 602 or 25 CFR Part 22). Another may be so long 
and complicated that it tends to create confusion (see 46 CFR 
Part 163). One U.S.C. citation in Title 46 leads the researcher 
to more than 70 CFR parts. Further examination indicated little 
concern by the agency as to whether its citations of authority 
are really accurate or pertinent. Some rules have no citation to 



REC. 3. CFR STATUTORY TABLE 65 

the United States Code (see 25 CFR Part 47) ; others cite ma- 
terial in the text of the rule which is not picked up for the 
Table (see 42 CFR 77.1). And there are instances of total mis- 
understanding of what authority to use (see 32 CFR Part 257). 
There is also a lack of concern about keeping citations current. 
Some rules in Title 7 CFR cite many authorities which have 
been obsolete for years. A review of 7 CFR Part 1871— a brief 
regulation— revealed that twenty-three of its twenty-seven cita- 
tions were wrong, or unnecessary: Three of the provisions cited 
had been renumbered, fourteen had been repealed, three had re- 
lated to bankruptcy actions, two applied only to Territories, and 
one was an authorization for appropriations rather than a rule- 
making provision. 

III. Conclusions 

To improve the table, at least two steps should be taken: 

First, the agencies must be urged to review their statutory 
citation practices with the Parallel Table in mind. This review 
should include references appearing in the authority citations 
themselves, in the text of the rules, or in the preamble. All 
changes should then be included in formal documents prepared 
for publication in the Federal Register as CFR amendments. 

Second, when the revised Parallel Table is prepared, its cover- 
age should be expanded to include citations in preambles and 
substantive text, as well as those in the formal authority state- 
ments. At present, the Table lists only United States Code pro- 
visions cited as authority for issuance. Well-drafted rules nor- 
mally contain a section called "Scope and purpose." This section 
cites statutory provisions being implemented by the rule. Often 
this valuable citation is not repeated in the authority citation, 
hence is not picked up for the Parallel Table. 

Sometimes an agency will cite useful authorities in the pre- 
amble or discussion paragraphs of a document. Since only the 
substantive text of the rule is published in the Code of Federal 
Regulations, these citations also are lost. 

Finally, there are many instances where a pertinent citation 
is missing, either because the statutory provision is not citable 
to the United States Code, or because the rules were issued before 
the United States Code supplement was published. A supple- 
mentary table listing these provisions by law number and U.S. 
Statute page should be created. 



RECOMMENDATION NO. 4 
CONSUMER BULLETIN 

Most Americans are probably unaware of the multitude of day- 
to-day Federal activities reflected in proposed, revised, and re- 
cently promulgated rules, regulations, or determinations which 
substantially affect the price, quantity, quality, labeling, safety, 
and other aspects of products and services available to the public. 
A bulletin of general distribution containing an easily understood 
summary of current information about administrative activities 
in areas of consumer interest could serve a widespread public 
need which is not now met by the "Federal Register" or by 
agency and private publications of a more specialized nature. 

RECOMMENDATION 

1. A consumer bulletin should be established on an experimen- 
tal basis. It should extract and paraphrase in popular terms the 
substance of Federal agency actions of significant interest to 
consumers. Initially, the bulletin should concentrate on items 
published in the "Federal Register," but as it gains public ac- 
ceptance, it should be broadened to include materials secured 
from other sources. It should indicate expressly that the bulletin 
does not constitute oflficial notice of government action., 

2. The Office of the Consumer Counsel in the Department of 
Justice appears at this time to be the agency best prepared to 
publish such a bulletin. If the bulletin were undertaken by that 
office it could not only disseminate information, but also stimulate 
public response, thus aiding the effective discharge of the duties 
of the Consumer Counsel. 

3. Initial circulation should include the press, consumer orga- 
nizations, public and scholastic libraries, and individuals who re- 
quest to be put on the mailing list. Format, subscription costs, 
frequency of publication, and related matters should be the sub- 
ject of study during the experiment. 

4. After a reasonable period of time, the effectiveness of and 
interest in the bulletin should be evaluated to determine whether 
it should be continued and, if so, in what form. 



66 



REPORT OF THE OFFICE OF THE CHAIRMAN 
IN SUPPORT OF RECOMMENDATION NO. 4 



The only federal publication of general national circulation 
which contains announcements and information of proposed or 
new government rules and regulations of interest to consumers 
is the Federal Register. As Miss Betty Furness, Special Assistant 
to the President for Consumer Affairs, stated in a letter to the 
Chairman of the Administrative Conference suggesting the de- 
velopment of a Consumer Bulletin : 

"I have become concerned about the lack of consumer involvement in 
government rule making affecting consumers. Day by day, agencies of our 
government fill the Federal Register with proposed and final rules, or- 
ders, and policies which directly and importantly affect consumers. Yet 
these publications go virtually unnoticed by consumers. More impor- 
tantly, consumers are not participating in the establishment of the rules 
which are supposed to reflect the interest of the consumer. 

"When the laws prescribing the method of publication and issuance of 
regulations were designed, they were aimed largely at providing a fair 
notification procedure for the industry regulated under the rules. No 
doubt this system has afforded 'due process' to the regulated industry. 
Yet the system apparently does not perform the function of providing 
the consumer with notice sufficient to stimulate him to participate in the 
making of rules which directly and significantly affect him. Stated in an- 
other way, it may be that the legal requirements of fairness also necessi- 
tate additional assistance to the consumer. 

"Obviously, the consumer is in a poor position to attempt to compre- 
hend the legal and technical language comprising the typical Federal 
Register notice — if. indeed, he knows of the existence of the Federal 
Register. The consumer does not have the benefit of the professional ad- 
vice available to industry through house counsel, trade associations, 
trade papers, "Washington counsel, etc. In most cases he has neither the 
time nor the collateral library materials to allow him to keep track of 
developments. 

"With the above in mind, I am submitting for the consideration of the 
Administrative Conference a file containing a few suggestions developed 
in my office for involving consumers in governmental rule making. 

"Essentially, what I am proposing is that there be established a regu- 
lar publication serving the needs of consumers in the same way that the 
Federal Register serves the needs of the regulated industry — a 'Con- 
sumer's Federal Register' if you will. I think it would serve consumers' 
needs if the major issues, culled from each proposed and final rule di- 
rectly and importantly affecting consumers, were summarized in such a 
publication with brief explanation of how the consumer could register his 

67 



68 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

views or obtain more information from the agency issuing the rule. The 
publication could be made available to consumers for a nominal sum. 

"Our proposal does not explore the questions of whether fairness or 
the elements of due process for consumers also might require preliminary 
public hearings prior to the adoption of such a rule, and of whether the 
validity of such a rule might be made dependent upon proper translation 
and publication for consumers. These and other questions pertaining to 
the proposal are deferred to you and the Conference." 

Upon receipt of the letter from Miss Furness, the Council 
members were contacted and it was agreed that a Consumer 
Bulletin should be the subject of a study by the Conference. 
Mr. Leonard Niederlehner, Acting General Counsel of the De- 
partment of Defense, and Chairman of the Committee on Infor- 
mation, Education and Reports was advised of this determination. 
The Consultant to that Committee, Professor Jerome Shuman of 
Howard University, immediately undeftonk ar-^study of the legal 
and other problems. At the same time, the professional staff of 
the Conference surveyed the kinds of information currently avail- 
able in the Federal Register which might appropriately be in- 
cluded in such a Bulletin. Appendix A describes items found in 
the Federal Register during a two-week period chosen at random. 

Professor Shuman interviewed a number of individuals within 
and without government; and in an informal memorandum rec- 
ommending the establishment of a Consumer Bulletin, he said: 

"Federal agencies generally publish in a wide variety of formats the 
decisions, activities, findings and rulings which take place within the 
scope of their operations. Much of the information contained in these 
publications have consumer implications. However, the consumer remains 
unaware of many of the rules, orders and policies established by govern- 
ment even though he is directly affected by them. * * * What is needed 
is a regular publication that will serve the needs of the consumer in 
much the same way the Federal Register serves industry. The proposed 
bulletin would bring together in one place this consumer information. The 
information contained in the Bulletin would be drawn from existing gov- 
ernment publications. No agency need be required to develop information 
especially for the Bulletin. In its initial stage the information in the Con- 
sumer Bulletin could and should parallel that incliided in the Federal 
Register except it would be brief and would be written in language read- 
ily understandable by all." 

Professor Shuman noted the existence of several excellent pri- 
vate publications, as well as those of some agencies, none of 
which, however, has the scope of the proposed Bulletin. 

After considering several alternatives, he concluded : 

"The newly created Office of Consumer Counsel should be the office re- 
sponsible for the development, publication and dissemination of the Con- 
sumer Bulletin." 



REC. 1. CONSUMER BULLETIN 69 

The subject was considered by the Council at its meeting on 
November 11, 1968. The recommendation to establish a Consumer 
Bulletin in the Office of Consumer Counsel, Department of Justice 
on an experimental basis was approved. Subsequently, the Ad- 
ministrative Conference has been advised that the Attorney Gen- 
eral, and the Consumer Counsel, Mr. Paul Bower, support the 
establishment of a Consumer Bulletin and its publication by the 
Office of Consumer Counsel. 



ATTACHMENT 

Illustrative Material Selected from the Federal Register 
(Covering the Two Week Period Beginning April 23, 1968) 

Headlight Concealment Devices— Referring to "reports of several accidents 
and incidents caused by . . . inadvertent blacking out of headlamps," the 
Federal Highway Administration announced that it has adopted a Motor Ve- 
hicle Safety Standard for headlight concealment devices. Among other provi- 
sions in the new Standard is a requirement designed to insure fail-safe 
operation of such a device in the event of a malfunction affecting its power 
supply. If provided on an automobile built on or after January 1, 1969, the de- 
vice must remain open if it is open when the malfunction occurs; and if it is 
not open at the time, it must be capable of being opened without using tools. 
More Automobile Safety Standards— Other new Safety Standards of Fed- 
eral Highway Administration provide for: 

—A second hood latch or latching system, if a sudden hood opening would 
partially or completely obstruct the driver's forward view (effective 
1-1-69). 
— Three anti-theft features: 

1. More key and lock variations (no less than 1000 for a major manu- 
facturer). 

2. A wheel-locking or steering-locking system triggered by removing 
the ignition key. 

3. A warning device which is activated when the driver opens his door 
without removing the ignition key. 

(All effective 1-1-69) 

Pesticides — The Food and Drug Administration has issued a statement of 
policy setting forth guidelines which the agency will follow in fixing toler- 
ances for pesticides that might find their way into milk, eggs, meat or 
poultry. These tolerances regulate the amounts of poisonous or possibly 
poisonous pesticides that may be used on raw agricultural commodities. 

"Made in U.S.A." — In an advisory opinion issued on April 4, 1968, the Fed- 
eral Trade Commission ruled that this label cannot be placed on garments 
manufactured in this country from imported cloth. 

Instant Nonfat Dry Milk — The Department of Agriculture and the Depart- 
ment of Health, Education, and Welfare have reached a policy agreement 
which will serve as a basis for a coordinated instant nonfat dry milk pro- 



70 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

gram. The program will include minimum standards and inspection provi- 
sions for manufacturing grade milk, the farms which produce it, and the 
plants and equipment which process it. The two Departments also agreed 
that these standards should be made progressively more stringent. 

In-Flight Entertainment and Service of Alcoholic Beverages — In light of a 
number of objections, the Civil Aeronautics Board has decided to reconsider 
its recent policy statement concerning passenger charges for visual in-flight 
entertainment and in-flight service of alcoholic beverages. Under this policy 
statement the airlines were advised to make separate charges for these serv- 
ices. The rule did not apply, however, to beer and wine served with meals. 

Cottage Cheese Ingredient — A petition has been filed with the Food and 
Drug Administration which requests the FDA to amend its rules so as to per- 
mit the addition of lactose to the creaming mixture used in the preparation 
of cottage cheese. According to the petition, lactose would improve the flavor, 
body, sensation of richness, shelf life and eye appeal of the product. The 
FDA invites all interested persons to submit their views in writing (prefera- 
bly with four extra copies) on or before June 1, 1968. Comments should be 
addressed to: Hearing Clerk, Department of Health, Education, and Wel- 
fare, Room 5440, 330 Independence Avenue, S.W., Washington, D. C. 20201. 

Catsup — The FDA has been requested in another petition to amend its iden- 
tity standard for tomato catsup insofar as sweetening agents are concerned. 
Catsup may now be sweetened with dextrose only if it is used in combination 
with sugar, and with corn or glucose syrup only if the corn or glucose syrup 
solids do not exceed one-third of the solid weight of all sweetening mixture. 
The proposed amendment would permit dextrose to be used as the sole sweet- 
ener and increase the allowable proportion of corn and glucose syrups. The 
FDA has invited comments, and except for the deadline, the procedure is the 
same as that for the proposal affecting cottage cheese which is described 
above; in this case comments must be filed on or before June 29, 1968. 



RECOMMENDATION NO. 5 

REPRESENTATION OF THE POOR IN AGENCY 
RULEMAKING OF DIRECT CONSEQUENCE TO THEM 



RECOMMENDATION 

A. Agency Efforts 

1. Federal agencies should engage more extensively in affirma- 
tive, self-initiated efforts to ascertain directly from the poor 
their views with respect to rulemaking that may affect them 
substantially. For this purpose, agencies should make strong 
efforts, by use of existing as well as newly devised procedures, to 
obtain information and opinion from those whose circumstances 
may not permit conventional participation in rulemaking pro- 
ceedings. The "rulemaking" referred to is that defined by the 
Administrative Procedure Act, § 2(c), 5 U.S.C. 551 (4) and (5). 

2. Agencies should employ as many of the following procedures 
as are feasible, practicable, and necessary to assure their being 
fully informed concerning the relevant interests of the poor : 

(a) Agencies should seek to inform the poor of all rulemaking 
proposals that may affect them substantially and should provide 
opportunities for the poor to submit their views concerning these 
and related proposals., 

(b) Agencies should hold formal public hearings or informal 
conferences in close geographic proximity to the poor substan- 
tially affected by contemplated rulemaking. 

(c) Agencies should take care to invite individuals constituting 
a representative cross-section of the poor to submit their views 
orally or in writing as to proposed rules substantially affecting 
the poor. 

(d) Agencies should conduct field surveys among the poor to 
discover their attitudes concerning particular government policy- 
making substantially affecting them. 

(e) Agencies should use advisory committees made of rep- 
resentatives of the poor as continuing consultants for all pro- 
grams having a substantial effect on such persons. 

(f ) When necessary to assure adequate representation for the 
poor, agencies should pay the personal expenses and wage losses 
incurred by individuals incident to their participation in rule- 
making hearings. Congress should support agency requests for 
funds and for authority, where none exists, to make discretionary 

71 



72 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

payments for this purpose. Agencies already authorized to make 
such payments in whole or in part should use their existing 
authority and should allocate funds accordingly. 

In deciding whether the use of any one or more of the above 
devices is feasible, practicable, or necessary in a given situation, 
agencies should resolve doubts in favor of utilizing them; but 
their enumeration should not exclude or discourage the develop- 
ment and use of other devices to achieve the same result. 

In carrying out paragraphs 1 and 2 of this recommendation, 
agencies should consult with and coordinate their efforts with 
other Federal agencies having responsibilities in this area and 
should make maximum feasible use of the facilities of such other 
agencies for communicating with and obtaining expressions of 
the views of the poor. 

3. Agencies should be encouraged in appropriate circumstances 
to determine that the exemptions in 5 U.S.C 553 (a) (2) should 
not be applied with respect to rulemaking which may have a sub- 
stantial impact on the poor. 

B. People's Council 

4. (a) An organization should be authorized by statute to em- 
ploy a staff to act as "People's Counsel." The People's Counsel 
should represent the interests of the poor in all Federal adminis- 
trative rulemaking substantially affecting the poor. 

(b) The People's Counsel should be charged with assuring 
that the views of significant separable minority interests among 
the poor are represented in such Federal administrative rule- 
making. 

(c) The People's Counsel should be required to disseminate to 
all interested poor people's organizations pertinent information 
concerning rulemaking substantially affecting the poor. 

(d) The People's Counsel should be authorized to participate 
suitably in its own name to represent the interests of the poor 
in any Federal agency proceedings in which the poor have a sub- 
stantial interest. 

(e) The People's Counsel should be authorized to provide repre- 
sentation for organizations and groups of the poor who seek 
judicial review of administrative action substantially affecting 
their interests. This recommendation is not to alter the kinds 
of agency action amenable to judicial review, the requirements 
of standing to seek review, or the scope of that review. 

(f) As an incident to its main responsibilities the People's 
Counsel should be empowered to recommend to Congress or the 



REC. 5. REPRESENTATION OF POOR 73 

President or to both such legislation or other action as it deems 
appropriate to correct deficiencies in or otherwise improve Fed- 
eral programs having a substantial impact on the poor. 

5. (a) Congress should provide for an appropriate body to 
perform the functions outlined in section 4. Deserving of con- 
sideration as such body would be a new single-purpose corpora- 
tion, to be created by Congress, modeled on the Corporation for 
Public Broadcasting, Public Law 90-129, 81 Stat. 368 (1967), 
47 U.S.C. (Supp. Ill) 396, and to be known as the People's 
Counsel Corporation. In the event this form of organization is 
adopted, the following considerations should apply : 

(1) The People's Counsel Corporation should be made tax 
exempt and authorized to accept grants of private funds. 
Gifts to the Corporation should be made deductible as chari- 
table contributions for Federal income tax purposes. 

(2) Federal financing of the Corporation should be made 
available to the extent necessary to assure its effective 
operation. 

(3) The governing board of the People's Counsel Corpora- 
tion should be constituted to give the poor meaningful rep- 
resentation thereon. Such body should be constituted to 
ensure close communication with the poor and effective rep- 
resentation of the viewpoints of the poor. 

6. All Federal agencies should be required by Executive order 
to notify the People's Counsel of all proposed rules which would 
have a substantial impact on the poor. Agencies also should be 
required by that Executive order to give the People's Counsel an 
opportunity to present the views of the poor with respect to such 
proposed rules. Exceptions to these obligations should be per- 
mitted only "when the agency for good cause finds (and incor- 
porates the finding and a brief statement of reasons therefor in 
the rules issued) that [such] notice and * * * [an opportunity 
for the People's Counsel to present its views] are impracticable, 
unnecessary, or contrary to the public interest." (See 5 U.S.C. 
553(b) (B).) In these exceptional cases, agencies should be re- 
quired to notify the People's Counsel as soon as practicable of 
any consummated rulemaking substantially affecting the poor, 
and should be required to give the Counsel as soon as practicable 
an opportunity to communicate to the agency its views concern- 
ing the desirability of further action with respect to such rule- 
making. 

Without prejudice to creating or empowering any other appro- 
priate body to perform the general functions outlined in para- 
graphs 4, 5, and 6, any special provision therefor should be so 



74 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

structured as to take maximum advantage of the capabilities in 
this field of nongovernment organizations, and of other public 
bodies, including notably the Office of Economic Opportunity. 

Separate Statements ^ Concerning Recommendation No. 5 

Statement of John H. Crooker, Jr. 

The majority position with respect to recommendation No. 5 
is that "Federal agencies" should make strong efforts to ascer- 
tain from the poor their views regarding rulemaking "that may 
affect them substantially." I believe that (a) the major independ- 
ent agencies are seldom involved in rulemaking affecting the 
poor except insofar as the poor are members of the public gen- 
erally; and {h) it was the intent of the Congress, in establishing 
the Administrative Conference, to have studies conducted and 
information collected and interchanged, so that administrative 
agencies might improve and expedite their general procedures. 

Therefore, I doubt that the Congress, in enacting section 5 of 
the Administrative Conference Act, 5 U.S.C. 574, intended that 
the Conference should address itself to the matters treated in 
recommendation No. 5. My dissent is not, in any way, directed 
to the wording of the recommendation. 

Statement of Paul Rand Dixon 

I disagree with the adoption of paragraphs 4, 5, and 6 of rec- 
ommendation No. 5 developed by the Committee on Rulemaking 
respecting the creation of a People's Counsel to represent the 
poor generally before Federal administrative bodies. I am fully 
aware of and sympathetic with the plight of the poor in our 
society. I recognize it as one of the primary problems that must 
be solved if our democratic way is to survive. However, I am fully 
of the opinion that this is a problem that should be debated and 
resolved by Congress. I find nowhere in the legislative history 
leading to the creation of the Administrative Conference of the 
United States any thought that the Administrative Conference 
would delve into this social problem. Even if I could bring myself 
to the thought that it was rightfully within the purview of the 
duties of the Administrative Conference to deal with the plight 
of the poor, I still would question the wisdom of creating a Poor 



'Title 5, U.S.C, sec. 575(a)(1) provides, in part, as follows: "A member who disagrees 
with a recommendation adopted by the Assembly is entitled to enter a dissenting opinion 
and an alternate proposal in the record of the Conference proceedings, and the opinion and 
proposal so entered shall accompany the Conference recommendation in a publication or dis- 
tribution thereof." 



REC. 5. REPRESENTATION OF POOR 75 

People's Counsel as the sole, if not principal, protector of the 
rights of the poor. The plight of the poor needs everyone's pro- 
tection, not just the protection of a People's Counsel. 

So that my position will not be misunderstood, I want it clearly 
known that I stand in the forefront of those who deem it neces- 
sary to do more to protect those low-income people in our society 
who are generally classified as poor. 

Statement of Joe M. Kilgore, joined by Richard H. Keatinge; 
Jim C. Langdon; Norman A. Flaningam; - Ross L. Malone; 
Starr Thomas; Harold L. Russell 

We did not support paragraphs 4, 5, and 6 of the recommenda- 
tion No. 5. We do support encouraging the formation of and 
recognition of a People's Counsel, as a private entity, to represent 
the public interest in the ai'ea of rulemaking in Federal agencies; 
with such Counsel being oriented to represent most fully those 
of the public whose interests would otherwise be unrepresented 
or underrepresented ; and with such People's Counsel being eligi- 
ble to receive Federal grants as required to permit its function. 

This dissent from the majority view is dictated by: 

1. The concern that this proposed function should be re- 
stricted, at least until experience might dictate otherwise, to 
the rulemaking function. 

2. The belief that the proposed representation should not 
be limited to any segment of the public, even though its 
principal thrust would be so directed. 

Statement of Malcolm S. Mason 

I support the purposes of this recommendation. When a People's 
Counsel is constituted, however, it is important to make a dis- 
tinction between two kinds of advocacy, so different that they 
cannot be directly conducted by the same organization. There is 
first of all adversary advocacy, owing an attorney's complete loy- 
alty to a specific client. In this sense, there cannot be a People's 
Counsel for the poor, because the poor are many and different 
and must be able to speak with many voices. This kind of advo- 
cacy is needed. It must be aggressive and hardhitting. If it is 
conducted directly by a Government or Government-controlled 
agency, its independence may be impaired. For this kind of advo- 
cacy an appropriate model is suggested by the Legal Services 
program conducted by many separate private local organizations: 



- Mr. FlaniriKam joins in this statement noting that the term "rulemakinK" as used herein 
refers to Federal agency processes for formulation, amendment, or repeal of rules of general 
applicability. 



76 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

Funded by OEO, but free, and indeed encouraged, to act fully on 
behalf of an actual client without limiting its vigor by reason 
of relationship to OEO. This I believe, will also be the pattern of 
the new HEW Legal Services program. 

There is also cooperative advocacy : Unaggressive, quiet, non- 
adversary, seeking to foster an awareness, a concern and a more 
lively recognition that poor people are affected by proposed ad- 
ministrative action. This kind of advocacy can be conducted by 
a Government or quasi-Government organization without incon- 
sistency and with benefit to the effectiveness of its work. An 
appropriate model is suggested by such accomplishments as new 
rules on loans to demonstration cooperatives of poor farmers 
(achieved by mutual agreement of the Department of Agriculture 
and OEO) ; new clarification of Government security regulations, 
removing barriers to the employment of hard-core unemployed 
with a criminal record (achieved by joint action of the Depart- 
ment of Defense, Department of Labor, and OEO) ; a new con- 
sensus on the wider use of policy advisory boards in programs 
affecting the poor (resulting in part from encouragement of this 
kind of action by OEO) . 

I urge that the Conference recommendation be implemented. 
In its implementation, contributions already made in this field 
should be recognized and used as a basis for expanded activity. 
The distinction between the two different types of advocacy 
should also be reflected in the choice of appropriate structure. 
Both are needed. 

Statement of Nathaniel L. Nathanson 

I would like to explain why I voted in favor of the recommenda- 
tion for a People's Counsel, as amended during the debate, because 
I believe that my interpretation of the final action taken may 
have been shared by others who also voted in favor of the proposal 
and is therefore entitled to some consideration in efforts to secure 
its implementation. 

While I was deeply troubled by some of the arguments advanced 
against the proposal, particularly by the misgivings expressed con- 
cerning the arrogance of a government agency or public corpora- 
tion undertaking to determine the interests of the poor in partic- 
ular agency action, I felt that this concern could be met by 
emphasis upon the representative character of the People's Coun- 
sel and a requirement that specific, identifiable interests be rep- 
resented, rather than hypothetical interests which might be 
imagined by the People's Counsel. This requirement could appro- 
priately be implemented by the further requirement that those 



REC. 5. REPRESENTATION OF POOR 77 

interests be identified in the form of particular groups or as- 
sociations who could determine their own interests and make 
their own wishes or basic positions known to the People's Counsel. 
This view was certainly made explicit in the amendment, pro- 
posed by the Judicial Review Committee and accepted by the Rule- 
making Committee, to paragraph 4(e) and it is also consistent 
with the final language of paragraph 4(d) as amended in the 
course of the debate so as to substitute "participate suitably" for 
the original word "intervene." This left a large measure of dis- 
cretion to each agency in allowing participation by the People's 
Counsel in a particular proceeding, including the requirement of 
a showing that the concern or position which the People's Counsel 
undertook to present was in fact shared by an identifiable 
group of people who were at least informed of the position 
which the People's Counsel was taking. I also doubt that the 
leaders of the poor people's movement who were quoted by 
Professor Bonfiield as favorable to the proposal envisaged a 
People's Counsel who would not be in any way answerable to the 
people he undertook to represent. 

I appreciate that this interpretation, emphasizing as it does 
the representation of identifiable groups who may exercise some 
control over the People's Counsel, may not be entirely acceptable 
to the original proponents of the proposal, particularly those who 
accepted the amendments with some reluctance. Nevertheless, 
they did accept the amendments, presumably for the purposes 
of mollifying the opposition and with some appreciation of the 
fact that the reasons for the amendments were more than techni- 
cal. Particularly in view of the closeness of the vote on the final 
approval of paragraphs 4, 5, and 6, the original proponents are 
hardly now in a position to insist upon the rejection of a rea- 
sonable interpretation which may have been decisive in the ap- 
proval of the recommendation. They may also take comfort in 
the fact that the current requirements for standing to participate 
in both administrative and judicial proceedings by groups in- 
directly affected by governmental action will scarcely inhibit 
the activities of a People's Counsel anxious and resourceful enough 
to find out what the people he purports to represent really want. 

Statement of Robert W. Graham 

May I respectfully record my dissent from the recommenda- 
tions of the Conference embodied in paragraphs 4, 5, and 6 of 
recommendation No. 5. No one can disagree with the stated 
objectives of these recommendations, and I do not. However, I 
do not conceive that these recommendations are appropriate 



78 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

within the mission of the Administrative Conference in its efforts 
to seek improvement of administrative procedures. Furthermore, 
I consider unsound attempts to fractionate the public interest 
which is properly the concern of our Federal administrative 
agencies. 



REPORT OF THE COMMITTEE ON RULEMAKING 
IN SUPPORT OF RECOMMENDATION NO. 5 



Prepared by 

Arthur E. Bonfield 

Professor of Law 

University of Iowa 



I. The Problem 

A. Generally 

The sound operation of the federal administrative rulemaking 
system demands that all relevant interests and viewpoints be 
considered prior to the formulation and promulgation of« its prod- 
uct. Only after such an examination can the responsible officials 
have any confidence in the soundness of the rules they create. 
Oflficials engaged in rulemaking for the federal government are 
usually apprised of the various interests and viewpoints deserving 
consideration in that process by representatives of individuals 
affected by their actions. 

The ample personal economic resources and relatively well- 
financed organizations of middle and upper income Americans 
usually assure their particular interests adequate representation 
in federal administrative rulemaking. The norm is that middle 
and upper income individuals, or their personal or organizational 
representatives, directly or indirectly monitor all agency activ- 
ities. These persons attempt to protect their interests through 
formal or informal participation in rulemaking affecting them. 
But federal rulemaking very frequently affects large numbers of 
individuals who lack the personal economic resources and orga- 
nized associations of middle and upper income Americans. These 
economically underprivileged persons are usually unable to keep 
themselves adequately informed of the numerous actual or pro- 
posed exercises of rulemaking authority affecting their interests. 
Normally the poor are also unable to communicate effectively to 
the appropriate authority their views about proposed rules, or 
to petition in their own interest for new rules or for the amend- 
ment or repeal of old rules. 

79 



80 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

An agency promulgating rules affecting the poor cannot as- 
sume that it automatically knows what is best for such people. 
Government administrators are usually persons with middle-class 
backgrounds, experiences, and associations; therefore, they tend 
to have middle-class viewpoints, orientations, and understand- 
ings. This means that the personnel of federal agencies may be 
expected to reflect more accurately the interests of the affluent 
than those of the economically underprivileged. Consequently, 
there is a special reason for concern when, as is now the case, 
the interests of poor people are inadequately represented in the 
rulemaking process. 

The administration of government undoubtedly suffers as a 
whole from the inability of the economically underprivileged 
segment of our society to represent adequately its group interests 
in the rulemaking process. The inability of the poor in this respect 
is injurious to the government's sound administration because 
it sometimes results in the formulation and promulgation of policy 
without consideration of all the relevant viewpoints. Recent re- 
sponses of the poor to the product of such an improperly func- 
tioning process have been expensive, time-consuming, and 
unfortunately, too often destructive. Ill-considered rules have fre- 
quently caused litigation, civil disobedience, and on occasion, 
riot. Some of this might have been avoided if the views of the 
poor were considered in the initial formulation of agency policies 
affecting them. 

This conclusion does not ignore the many well-intentioned and 
often considerable efforts of the appropriate officials to ascertain, 
by their own investigations, the views of the economically under- 
privileged concerning administrative rulemaking that affects 
them. But available evidence establishes that these official efforts 
have been insufficient to compensate for the inability of the poor 
affirmatively to represent their own interests in rulemaking. The 
fact is that government administrators are too often inadequately 
apprised of the poor's views respecting the desirability of existing 
or proposed rules. 

B. General Summary of the Evidence 

Substantial evidence supports the conclusion that the poor of 
our society have been inadequately represented in federal rule- 
making. Some original data on this subject was obtained from a 
questionnaire entitled "Survey of Participation of the Poor in 



REC. 5. REPRESENTATION OF POOR 81 

Agency Rulemaking of Particular Interest to the Poor" distrib- 
uted to some forty federal agencies during the summer of 1968.' 

Each federal agency surveyed was asked the following initial 
question: 

1. What programs dors your department or agency administer 

a. that are directed primarily at the economically underprivileged 
segments of our society, or, 

b. although not directed primarily at such segments, may have a 
very substantial impact on them? 

Most agencies listed those programs under their respective juris- 
dictions reasonably falling within the above categories. However, 
the questionnaire responses indicated that a few agencies admin- 
istering programs in class (1) (b) above do not recognize that 
they are in fact doing so. This is, even though they are ad- 
ministering some programs having a very substantial impact on 
the poor, a significant number of agencies replied to question 
(1) (b) by stating that they administered no programs of that 
type.- In addition, a few agencies that did list some programs 



' The following agencies responded to the questionnaire which was distributed as a survey of 
the RulemakinK Committee of the Administrative Conference of the United States : Department 
of Justice ; Civil Service Commission ; Post Office Department ; Department of Agriculture ; 
Department of the Interior: Department of Health, Education, and Welfare: Tennessee Valley 
Authority : Department of Labor ; Office of Economic Opportunity : Equal Employment 
Opportunity Commission ; Federal Power Commission : United States Commission on Civil 
Rights : Small Business Administrat'on : National Capital Planning Commission : Federal 
Communications Commission : Securities and Exchange Commission : Foreign Claims Settlement 
Commission of the United States : National Science Foundation ; National Advisory Council on 
the Education of Disadvantaged Children ; Smithsonian Institution ; President's Council on 
Youth Opportunity : Department of State ; Washington Metropolitan Area Transit Authority ; 
Department of the Treasury ; General Services Administration ; Appalachian Regional 
Commission; Interstate Commerce Commission; Farm Credit Administration; Federal Reserve 
System ; Veterans Administration ; Federal Home Lxjan Bank Board ; Department of Commerce : 
Department of Housing and Urban Development. 

-The following examples are illustrative: 

"Concerning the study that your Committee on Rulemaking is making of participation of the 
poor in agency rulemaking . . . [the U.S. Civil Service Commission is] declining to attempt to 
fill out the questionnaire because we do not believe it is applicable to us." Yet that body makes 
the general rules for government hiring and classification of employees, and it administers 
nondiscrimination in government employment [under Exec. Order No. 11,246, 30 Fed. Reg. 12319 
§§ 103, 104 (1965)]. 

"Please be advised that the General Services Administration does not appear to have programs 
of the nature contemplated by the Survey of Participation of the Poor in Agency Rulemaking." 
Yet many of the programs administered by this agency undoubtedly fit within class (1) (b) of 
the question in the text since the manner and conditions under which the national government 
purchases and sells supplies and property and cares for and constructs federal buildings 
undoubtedly has a substantial impact on the poor. 

"This is in reply to your letter of July 18 which requested responses to a survey questionnaire 
dealing with programs administered by [the Post Office] Department which are directed at or 
have a very substantial impact on the jioor. The Department does not administer any such 
programs. Our primary activity, moving the mail, and our programs to effect that end, are not 
directed at any economic group and do not have the impact on the poor contemplated by your 
questionnaire." Yet the Post Office is one of the largest actual or potential government 
employers of "poor" people. Its part-time hiring during Christmas, for example, has a 
substantial impact on the poor. In addition, whether it delivers mail on five or six days a week 
may have a qualitatively greater impact on the poor than on others. If the poor cannot get 



82 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

having a substantial impact on the poor neglected to list all of 
their programs fitting into that category.^ If the agencies in- 
volved do not understand that some of their programs have a 
substantial impact on the poor, or cannot determine which of 
their programs have that effect and which do not, the interests 
of such persons are inadequately represented in rulemaking for 
those programs. 

The questionnaire also asked the agencies surveyed : 

5. Does your agency now attempt to ascertain the views of poor and 
economically underprivilegd persons in respect to rules and policies 
proposed to be issued to implement the programs listed in response to 
question 1 above? If so, please describe in detail the procedures you use 
in each program to ascertain these views. 

About one third of the agencies claiming to administer programs 
substantially affecting the poor indicated that they had not previ- 
ously attempted to ascertain the views of economically under- 
privileged persons with respect to rules and policies proposed by 
the agencies to implement those programs. A typical response of 
this kind stated that "We do not now attempt to ascertain the 
views of the poor and economically underprivileged, as such." * 



their welfare or social security checks on time because mail is delivered only five days a week, 
they have no other resources to fall back on. 

^ The following examples are illustrative. 

While the Department of I-abor lists enforcement of Title VI of the Civil Rights Act of 1964 
[42 U.S.C. § 2000 (1964)] implemented by regulations found in 29 C.F.R. pt. 31 (1968), it does 
not list its role as implementor of Executive Order No. 11,246, 30 Fed. Reg. 12319 (1965). The 
former program is to effectuate the policy of the Civil Rights Act of 1964 that no person shall, 
on the ground of race, color, etc. be excluded from participation in or discriminated against in 
any program receiving federal financial assistance from the Department of Labor, while the 
latter is a program administered by that Department to assure nondiscrimination in employment 
by government contractors and subcontractors. In addition, while the Department of Labor does 
list the Farm Labor Contractor Registration Act of 1963, 7 U.S.C. § 2041 (1964), implemented 
by regulations found in 29 C.F.R. pt. 40 (1968), it does not list as a program substantially 
affecting the poor the hracero program partially administered by that department under 20 
C.F.R. § 602.10 (1968). The former program requires certain persons to obtain certificates of 
registration prior to performing any activities which constitute engagement in farm labor 
contracting, while the latter requires that the Secretary of Labor certify certain facts as a 
condition for the admission of aliens to perform certain temporary agricultural or logging 
industry services. 

While the Department of Agriculture lists many programs it administers having a substantial 
impact on the poor it does not list the price support and production stabilization programs 
administered by the Commodity Credit Corporation and the Agricultural Stabilization and 
(Conservation Service. Also omitted from the Department's enumeration of its programs having 
a substantial impact on the poor are the Rural Electrification Administration programs and 
Federal Extension Sei-vice programs. See 1968-69 Uniteh) States (Jovernment Organization 
Manual 273-77, 283, 294. 

■• Veterans Administration. Responses of a significant number of other agencies were similar. 
The following examples are illustrative: 

The Federal Home Loan Bank Board reported that it "makes no special provision to secure 
the views of poor persons." The Tennessee Valley Authority simply answered question 5 "No." 
"The [Federal Power] Commission does not make an overt effort to solicit the advice of the poor 
as such . . . ." "The Department [of Transportation] does not, by regulation, specifically, 
attempt to ascertain the views of the poor in regulatory activities listed in paragraph 1." "The 
views of poor and economically underprivileged persons have not been actively solicited [by the 



REC. 5. REPRESENTATION OF POOR 83 

About two thirds of the agencies reporting that they adminis- 
tered programs substantially affecting the poor stated that they 
had made some efforts to ascertain the views of those people 
with respect to rulemaking for such programs. In most cases, 
however, the efforts described are totally inadequate for the pur- 
pose. They are frequently haphazard, unsystematic, and sporadic.^ 
The means used have sometimes been so informal and unstruc- 
tured as to achieve the result only incidentally and accidentally 
if at all.'' Furthermore, agencies frequently seem to have sought 
information about the views of the poor from persons who are 
neither poor nor reliable spokesmen for the mass of the poor 
affected by those agencies' actions." The answers to question 5 
also indicate that very few of those agencies stating that they 
attempt to ascertain the views of the poor make any consistent 



Federal Reserve System] in respect to rules and policies regardinK the proEram mentioned in lb, 
above . . . ." "There is no regular procedures in effect whereby the views of the poor are 
obtained in connection with the issuance of policies and procedures"' of the Department of 
Housing and Urban Development. 

Many of the above responses do, however, go on and assert specifically that this does not 
mean that the interests and views of the poor are ignore<l with respect to that portion of the 
agency's policy-making which affects them. 

'The following examples are illustrative: 

For three out of the five programs reported by the Small Business Administration as having a 
substantial impact on the poor, it answered question '> "No." While it claimed to make an effort 
to ascertain the views of the poor with respect to some programs, the Department of Health, 
Education and Welfare reporte<l that it did not make a specific attempt to solicit regularly the 
views of the poor as such with respect to rulemaking for the Old Age Survivors and Disability 
Insurance Programs and the Social and Rehabilitation Services Programs. The Department of 
Agriculture reported that it "has not heretofore, on its own initiative attempted to ascertain 
the views of poor and economically underprivileged persons in respect to rules and policies 
proposed to be issued to implement the listed ffood distribution] programs," but it has 
attempted to do so with respect to programs administered by the Farmers Home Administration. 

'For example, the Equal Employment Opportunity Commission reported that "[olur agency 
ascertains the views of economically underprivileged persons in respect to rules and policies 
informally insofar as these views are elicited in the course of investigation of charges of 
unlawful practices." 

' For example, the Department of Agriculture reporte<l that it ascertains the views of the 
poor with respect to programs administered by the Farmers Home Administration (FHA) from 
its Technical Action Panels, County FHA Committees, and State FHA Advisory Committees. Yet 
these bodies rarely if ever have members who are poor persons themselves, that is, members "of 
the poor" ; and these bodies rarely have adefiuate representatives of the poor's views as such 
among their membership. Some Technical Action Panels may have the Directors of local 
Community Action Program (CAP) organizations and welfare agencies among their number. 
But these officials do not necessarily represent the views of the mass of the poor since their 
CAP or welfare agency positions are controlled by the establishment, they are not themselves 
poor, and frequently their outlook may be middle-class- and establishment-oriented. This is 
especially true with respect to the Directors of CAP programs since the Green Amendment, 42 
U.S.C. § 2790 (Supp. Ill, 196.5-1967), amending 42 U.S.C. § 2790 (1964). 
In addition, the Department of Health, Education, and Welfare reported that: 

The Social Security Administration [with respect to Medicare] consults with the Health 
Insurance Benefit Advisory Council, a panel of 19 persons outstanding in fields related to 
hospital, medical and health activities, on matters of general policy and in the formulation 
of regulations. The panel includes representatives of public and private medicine, 
hospitals, nursing homes, health insurance, labor, and the general public. The poor, as 
such, are not represented on the panel — the public, as such, is represented on the panel. 
Obviously, attempts to ascertain accurately the views of the poor from these people are not 
likely to be very successful. 



84 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

efforts to do so through means specifically and specially tailored 
to accomplish that result in a reliable way. For example, some 
agencies claimed that they attempted to ascertain the views of 
the poor by issuing general public invitations to all interested 
people, including the poor, to submit their views upon particular 
rules proposed by the agency.** 

Responses to a further question are also instructive because 
they indicate that, in fact, the interests of the poor have rarely 
had any continuous and systematic affirmative representation in 
the federal rulemaking process. That question asked : 

7. Have any particular g-roups or organizations intervened or other- 
w^ise participated for the purpose of representing the views of the poor 
in rule-making or in proposing rules in connection with any of these 
programs? If so, please identify the groups or organizations and indi- 
cate the frequency of such participation and the method by which each 
group or organization has participated. 

About half of the responses from agencies acknowledging that 
they administered programs substantially affecting the poor in- 
dicated that no particular groups or organizations had inter- 
vened or otherwise participated in their rulemaking for this 
purpose." An additional number of respondents indicated that 
outside organizations had participated, on behalf of the poor, in 
agency rulemaking for some programs substantially affecting 
such people, but not at all in the rulemaking for other such 
programs." 

According to the responses received to another interrogatory 
contained in the questionnaire, the present situation is not likely 



* For example, the Department of Labor reported : 

When notice of proposed rulemakinpr is Riven, the Department of Labor invites every 

interested person to submit written data, views or argument, and, when an opportunity is 

provided for oral presentations, to participate orally. Special notice is customarily given 

labor unions where interest of their members is involved. 

And the Federal Trade Commission reported that it attempts to ascertain the views of the poor 

"through building up of public records contributed by members and representatives of all sectors 

of the economy and through the holding of public hearings in some cases." According to the 

questionnaire responses, no special effort seems to be made by these two agencies to notify the 

poor or solicit their views as distinguished from the public generally. Certainly the unions are 

not adequate representatives of the poor's interests before the Department of Labor. 

"For example, the Department of Transportation reported that: "No particular groups have 
intervened or otherwise participated for the purpose of representing the views of the poor in 
rulemaking in this Department" ; the Equal Employment Opportunity Commission reported that 
"[n]o group or organization has formally intervened or participated for the specific purpose 
of representing the views of the poor in rulemaking" ; and TVA simply answered question 7, 
"No." 

^* For example, the Small Business Administration reported that no groups participated to 
represent the poor in rulemaking for any of its programs except the Economic Opportunity 
Loan Program, where many groups have participated for this purpose. Similarly, the 
Department of Agriculture reported that for food distribution programs, some groups had 
participated, but for Farmers Home Administration programs, "[t]he answer to this question is 
in the negative." 



REC. 5. REPRESENTATION OF POOR 85 

to change very much without external stimulation. The agencies 
were asked: 

6. Does your agency contemplate using any particular means not 
utilized at the present time by it to insure that the views of the poor are 
adequately ascertained prior to the promulgation of any rule intended 
to implement or affect these programs? If so, please explain in detail. 

A number of very important agencies from the point of view of 
the poor indicated that they intended to institute new and more 
effective means by which to ascertain the views of the poor with 
respect to rulemaking substantially affecting those people." How- 
ever, most agency respondents indicated that they had no such 
plans, and that they were satisfied with their present efforts in 
this regard.^- 

In addition to the responses gleaned from the questionnaire 
distributed to the various federal government agencies, other 
evidence directly or indirectly supports the proposition that the 
interests of the poor have had inadequate representation in fed- 
eral rulemaking important to them. Officials of a number of 
major organizations purporting to represent some segment of the 
poor were questioned.^' They indicated that poor people's organi- 
zations had only rarely participated in federal administrative 
rulemaking, and then only very recently and on an ad hoc basis. 
The reasons most often cited for the failure of the poor to 
participate more extensively in that process were their lack of 
knowledge that rules of interest to them were being considered, 
their lack of money to finance such participation, their lack of 
knowledge of the means by which they could participate, and the 
relevant agencies' lack of interest in ascertaining their views. 

The representatives of those poor people's organizations ques- 
tioned during this study also made another significant point. 



"The Department of Health, Education, and Welfare, the Department of Agriculture (but 
only in regard to consumer food programs), and the Department of Labor reported such plans. 

"For example, the Veterans' Administration stated that: "fwle have no plan at present to 
use any particular means other than those explained above, to insure that the needs of the poor 
veterans, as such, are ascertained prior to the promulgation of rules." The Equal Employment 
Opportunity Commission reported that: "[o]ur agency does not at present contemplate 
utilization of other means to insure that the views of the poor are ascertained prior to 
promulgation of rules." And the Small Business Administration and Tennessee Valley Authority 
both simply replied "No" to question 6. 

" Among the people questioned, either in person or over the telephone, were Clarence Mitchell, 
NAACP ; Cenoria Johnson, Urban League ; Tim Sampson, National Welfare Rights 
Organization ; Philip Ryan, in the offices of Marian Wright, Counsel to the Poor People's 
Campaign ; Steven Rosenfield, Citizens Advocate Center ; Norman Kurland, Citizens Crusade 
Against Poverty ; and Larry Silver, Neighborhood Legal Services Program. All of the above are 
located in Washington, D.C. Also questioned were Gary Bellow of the California Rural Legal 
Assistance Program, McFarland, California ; Junius Allison of the National Legal Aid and 
Defender Association, Chicago ; and Leroy Clark, formerly of the NAACP Legal and Educational 
Defense Fund of New York. 



86 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

They insisted that one of the most important deficiencies of the 
federal administrative process is the inability of economically 
underpriviledged persons to have their views adequately repre- 
sented in the formulation of policies affecting them. In this con- 
nection it should be noted that the Poor People's Campaign of 
1968 specifically and repeatedly demanded that there should be 
greater consultation with the poor and greater consideration of 
their views in the formulation of administrative regulations af- 
fecting them.^* In responding to thoese demands, some federal 
agencies tacitly admitted that the poor had been inadequately 
represented in the formulation of administrative policy. Those 
few agencies stated that they intended to adopt new means to 
enhance the poor's participation in that process.^'"' This fact cor- 
relates with the previously reported responses to question 6 of 
the questionnaire. 

The ofl^cial agency responses to some of the specific substantive 



" For example, the Poor People's Campaign demanded of the Department of Labor 
"[i]nvolvement of the poor in decision making about manpower training and other employment 
programs" ; of the Office of Economic Opportunity "that the O.E.O. reorder its priorities so that 
the consumers of services be involved in the policy making ... of those programs which 
continue to be administered by the agency" ; of the Department of Health, Education, and 
Welfare (1) "that the Department of Health, Education and Welfare require of grantees that 
poor people be included in planning bodies under the comprehensive health planning and 
Medicare programs which have provisions for citizen membership on their planning boards" 
(2) that HEW "[e]stablish a national structure and mechanism which provides for continuous 
input by poor black, brown, and white people in the design, development, operation and 
evaluation of all federally funded education programs" and (3) that HEW "requir[e] that 
[welfare] recipients be involved in making policy and program decisions about how the program 
will be carried out by the states and localities." 

The quoted demands may be found in the mimeo sheets entitled "Statement of Demands for 
Rights of the Poor Presented to Agencies of the U.S. Government by the Southern Christian 
Leadership Conference and Its Committee of 100, April 29-30, May 1, 1968" presented by the 
Poor People's Campaign to each of the above agencies. 

'^ For example, note that the Department of Health, Education and Welfare replied to the 
Poor People's Campaign by stating that (1) "We will increase our efforts to involve persons 
representative of the poor in our activities and on Advisory Committees," (2) "we will 
establish, and require each state to establish, some vehicle for obtaining the advice of the poor, 
especially recipients in program and policy development," and (3) "the Commissioner [of 
Education] and members of his staff will meet with a group of persons broadly representative 
of the poor and arrange for continued participation of such a group with respect to all 
federally funded education programs in the Office of Education" ; the Department of Labor 
responded by stating that "[a]dditional efforts to reach and to communicate with the poor 
must be made so that their needs are understood" ; and the Office of Economic Opportunity 
responded to the Poor People's Campaign by stating that "[t]he Community Action Program 
is instituting a system by which drafts of major policy instructions will be circulated for 
comment to all grantees and national organizations interested in community action before be- 
coming official. Representatives of the poor on C.A.A. boards and advisory counsels shall thus 
have a chance to discuss policy and make their views known to O.E.O before the policy is 
formally adopted. . . . The O.E.O. will involve the poor as consultants in O.E.O program 
development." 

The above quotations may be found in the official responses from each of the above agencies 
to the demands of the Poor People's Canlpaign. Letters to the Reverend Ralph Abernathy from 
Wilbur Cohen, Secretary of Health, Education, and Welfare May 25, 1968, and June 18, 1968 ; 
from Willard Wirtz, Secretary of Labor, dated May 27, 1968 ; from Bertram Harding, Acting 
Director of OEO, undated and titled "Office of Economic Opportunity Response to Poor People's 
Campaign." 



REC. 5. REPRESENTATION OF POOR 87 

demands made by the Poor People's Campaign of 1968 may also 
constitute some evidence that the poor have been inadequately 
represented in the federal rulemaking process. After examining 
objections raised by the poor, a number of agencies admitted that 
several of their substantive policies questioned by that Campaign 
were inadequate and should be changed.^" This indicates that 
these agencies may not have been properly apprised of the rel- 
evant interests of poor people when the administrative decision 
makers first formulated the policies involved. A few officials have 
privately admitted that this was the case in some of those situ- 
ations. (Of course, in other of those situations the decision makers 
may have been adequately apprised of the relevant interests of 
the poor and simply made unwise policy decisions. High quality 
representation of the poor's interests in rulemaking cannot in- 
variably assure that administrators will make wise decisions!) 

Similarly, a number of recent lawsuits may also attest to the 
inadequate representation accorded the poor in the federal rule- 
making process. These suits indicate, in one way or another, 
that certain federal administrative action or inaction did not 
properly protect the interests of poor people.^' A possible implica- 
tion may be that the interests of the poor were so inadequately 



^^ For example, in response to a request for more stringent enforcement of fair employment 
by federal Kovernment contractors, the Department of Labor stated that it "will issue new 
Kuidelines requiring firms holding government contracts to use hiring and promotion tests 
that are racially culturally fair." It also stated that it "will issue new regulations to tighten 
the Labor Department equal opportunity programs," expanding coverage from first level to 
all levels of subcontractors and requiring positive action programs from contractors. Letter 
from Willard Wirtz, Secretary of Labor, to the Reverend Ralph Abernathy May 27, 1968. 
Similarly, in response to a demand that health services be made available to poor through 
comprehensive neighborhood health centers, the Department of Health, Education, and Welfare 
responded that it will pool funds from different sections of HEW and other agencies to support 
comprehensive health services in poor urban and rural areas. And in response to a demand 
that only declarations of facts be required of recipients under federally financed state welfare 
programs the Department promised to institute such a system. For both of the above HEW 
replies, aee letter to the Reverend Ralph Abernathy from Wilbur Cohen, Secretary of Health, 
Education, and Welfare May 25, 1968. Note also that of the five high-priority changes in the 
size, shape, and location of food distribution programs demanded by the Poor People's Cam- 
paign of the Department of Agriculture, four were at least partially met. Des Moines Register, 
Nov. 16, 1968, at 8, col. 4, .5 : Wall St. J., Dec. 12, 1968, at 2, col. 3. 

"See, e.g.. King v. Smith, 392, U.S. 309 (1968), holding that the Alabama substitute-father 
regulation (which reciuires disqualification of otherwise eligible children from federally sup-, 
ported aid to dependent children if their mother cohabits with a man not obligated by Alabama 
law to provide support) defines "parent" in a manner inconsistent with the national Social 
Security Act and is therefore invalid with respect to the program. 392 U.S. at 333 n.4. To the 
extent HEW approved any man-in-the-house provision in state plans that conflicted with the 
Social Security Act that approval was improper because it was inconsistent with the con- 
trolling federal act. After King v. Smith, HEW issued new regulations outlawing such substi- 
tute-father rules. 33 Fed. Reg. 11290. In Thorpe v. Housing Authority, 386 U.S. 670 (1967), 
a tenant in federally assisted low rent public housing was given notice of eviction without 
explanation after being elected president of a tenant's organization. The Supreme Court 
vacated the judgment below affirming eviction and remanded for a reassessment of that judg- 
ment in light of directive issued by the Department of Housing and Urban Development after 
grant of certiorari requiring that no tenant be given notice to vacate without reasons for 
eviction and a chance to explain. 



88 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

represented in those agencies' policymaking processes that a law- 
suit was required to induce proper protection for the economically 
underprivileged. 

To all the above evidence may be added the fact that many 
scholars studying the poverty problem agree that the interests 
of the poor are inadequately represented in the rulemaking proc- 
ess. Moreover, in some situations the administrative rules or 
lack of administrative rules implementing a particular program 
affecting the poor treat the interests of those people in such a 
way that the poor were not likely to have been properly rep- 
resented in their formulation.^^ It should also be recalled, as noted 
previously, that administrative policy makers almost always have 
middle-class backgrounds and therefore are not usually personally 
familiar with, or natural advocates for, the interests of the poor. 

C. Some Definitions 

In light of the above evidence, a number of specific recommen- 
dations with respect to representation for the poor in federal 
rulemaking seem appropriate. To assure precision, several terms 
utilized in the recommendation and in the remainder of this 
Article deserve definition. The words "poor" and "economically 
underprivileged" are used as synonyms. They refer to that group 
in our society unable to represent adequately its collective inter- 
ests in federal rulemaking because its members lack the individual 
or organizational financial resources to do so. Consistent with 
this definition some groups of individuals may be poor or eco- 
nomically underprivileged in relation to certain rulemaking and 
not in relation to other rulemaking. This Article and the accom- 
panying recommendations assume that people will be treated as 
poor only in the rulemaking situations where they are unable to 
represent themselves adequately because of their financial in- 
capacity. Depending on the circumstances it is possible, therefore, 
that those who are deemed poor for present purposes may vary 
to some extent with the particular rulemaking involved. 

The "rulemaking" referred to is that defined by section 2(c) 
of the Federal Administrative Procedure Act (APA).^« "Rule- 
making" therefore means "agency process for the formulation, 
amendment or repeal of a rule." The word "rule" refers to "the 
whole or any part of any agency statement of general or partic- 
ular applicability and future effect designed to implement, in- 



^^See, e.g.. Note, Welfare's "Condition X". 76 Yale L.J. 1222 (1967). 

"5 U.S.C. § 1001(c) (1964), as amended, 5 U.S.C. § 551(5) (Supp. HI. 1965-1967). 



REC. 5. REPRESENTATION OF POOR 89 



terpret, or prescribe law or policy or to describe the organization, 
procedure, or practice requirements of any agency. . . ." ^° 

D, The Precise Scope of the Task 

The purpose of the recommendations is to assure that the 
interests of the poor in our society are adequately represented 
in all federal rulemaking having a substantial impact on them. 
In doing so, the primary concern is the ability of the economically 
underprivileged to participate in rulemaking both for those pro- 
grams dii-ectly aimed at them and for those which, although not 
directed at the poor, substantially affect them as a separate 
group. However, the need for adequate poor people's representa- 
tion in rulemaking extends beyond this. Rulemaking for some 
programs thought not to concern the poor and usually not af- 
fecting the poor may, on occasion, have a large impact on them. 
Consequently, an adequate remedy must include a mechanism for 
monitoring, on behalf of the poor, all federal rulemaking; and it 
must assure, insofar as practicable, representation for the poor in 
all rulemaking having a substantial impact on them, even though 
that rulemaking occurs in a particular program not normally 
having that kind of effect. The need to secure representation 
for the poor for all rulemaking of this sort is especially critical 
when it is remembered that rulemaking is frequently not an 
on-going process. It may be a one-time affair resulting in a rule 
to last for the indefinite future. Failure to assure adequate repre- 
sentation for the poor's interests in all rulemaking having a 
substantial impact on them as a separable group may, therefore, 
have long-term rather than short-term deleterious consequences 
in many situations. 

It would be simple to formulate a nearly perfect solution to 
the problem under consideration if the poor were a monolithic 
or homogeneous group with its own democratically elected rep- 
resentative structure which could be called upon to articulate 
the particular interests of the poor wherever they are affected. 
The fact is that no organization, group, or individual can right- 
fully assert that it speaks for all the poor of this country in any 
truly democratic or representative sense. The poor are too hetero- 
geneous and diverse ; their interests too disparate and f raction- 
alized. Even the sum total of all groups or organizations pur- 
porting to represent the interests of the American poor do not 
do so in any really democratic sense since most poor people are 
not members of any such group or organization. The interests 



^5 U.S.C. § 1001(c) (1964), as amended, 5 U.S.C. § 551(4) (Supp. III. 1965-1967). 



90 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

of the majority of poor may also sometimes diverge from the 
views of the many organized groups purporting to speak for 
some segment of them or for all of them. In addition, the leader- 
ship of some so-called "poor people's groups" may fall into the 
hands of persons who are in fact out of touch — or simply not 
concerned — with reflecting the views and promoting the welfare 
of the mass of the economically underprivileged. For these rea- 
sons, the creation of a truly representative agent to articulate 
and represent the heterogeneous interests of the poor is both 
impractical and infeasible. Consequently, the most satisfactory 
means of assuring adequate representation for the poor in federal 
rulemaking substantially affecting their interests will necessarily 
be imperfect. It also may have to be, in at least one sense, arti- 
ficial and imposed from above. 

Efforts to secure adequate representation for the economically 
underprivileged in all federal rulemaking having a substantial 
impact on them will have to move on two fronts to be successful. 
An attempt must be made to assure that federal agencies making 
rules of this kind independently seek to ascertain from the poor 
their views with respect to such rules. In addition, an attempt 
must be made to help the poor obtain affirmative representation 
for their interests in the rulemaking process. That is, some means 
must be devised by which to assure that these people have a 
competent, consistent, and aggressive advocate for their interests 
before federal agencies. Within the limits set by this two-pronged 
approach, a desirable solution should also be feasible — that is, 
realistically achievable; should take account of the fact that the 
interests of the poor needing representation may often be frac- 
tionalized and diverse; should be workable in an everyday, op- 
erative sense; and should be as economical as possible. Moreover, 
such a solution should be practical in the sense that the positive 
contribution it may make to the administrative process should 
overbalance any negative impact it may have on that process or 
other societal values. A desirable resolution of the problem under 
consideration should also make it as obvious as possible to the 
poor that their views will be adequately represented in rule- 
making. This particular requirement may not directly enhance 
the proper functioning of the administrative process as such. It 
may, however, help to eliminate that portion of the poor's distrust 
of and dissatisfaction with government which stems from their 
perception that officialdom does not adequately consider their 
views when it makes policy affecting them. 



REC. 5. REPRESENTATION OF POOR 91 

II. Assuring Affirmative Agency Action To Ascertain 
THE Views of Poor People 

A. Generally 

Officials responsible for promulgating rules substantially af- 
fecting the economically underprivileged segment of our society 
should, where feasible, increase their existing efforts to ascertain 
independently the views of poor people. They should also devise 
additional effective means by which to do so. This approach 
stresses the ability of the several agencies involved to develop 
and utilize affirmative procedures for obtaining, through direct 
and continuing contact with the poor themselves, the specific in- 
formation that they should consider when they formulate their 
programs affecting the poor. 

There is an analogy in Budget Bureau Circular A-85, which 
is entitled "Consultation with Heads of State and Local Govern- 
ments in Development of Federal Rules, Regulations, Procedures 
and Guidelines." This document orders federal agencies to follow 
certain procedures geared to assure that there is adequate con- 
sultation with the heads of state and local governments prior to 
the promulgation of rules for the implementation of specific 
kinds of federal programs vitally affecting them. The Defense 
Production Act of 1950 also provided that "[a]ny rule, regula- 
tion, or order, or amendment thereto, issued under authority of 
this Act shall be accompanied by a statement that in the formula- 
tion thereof there has been consultation with industry representa- 
tives, including trade association representatives, and that 
consideration has been given to their recommendations. . . ." ^^ 
Similarly, federal agencies should follow procedures with respect 
to rulemaking that will assure, where feasible and practicable, in- 
dependent agency efforts to ascertain directly from the poor 
their views with respect to proposed rules substantially affecting 
them. 

B. Some Specific Suggestions 

Agencies administering programs of concern to the poor should 
be urged to hold formal hearings — that is, oral public hearings — 
on proposed rules in close geographic proximity to the poor people 
affected. They should also be urged to obtain witnesses and solicit 
written views from among the affected poor and organizational 
representatives of the affected poor. Federal agencies should use 
special notice and hearing arrangements tailored to meet the 



Act of Sept. 8, 1950, ch. 932, § 709, 64 SUt. 819. 



92 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

peculiar problems of economically underprivileged persons in 
order to assure their effectiveness in accurately and successfully 
obtaining the views of such people. As an illustration, publication 
of a proposed regulation and notice of a public hearing in the 
Federal Register may constitute adequate notice for middle and 
upper income Americans v^hose agents or group representatives 
read that periodical, but it is usually inadequate by itself to ap- 
prise the poor. To faciliate affirmative agency action to ascertain 
the views of the poor, increased use of field surveys should also 
be encouraged. In addition, or as an alternative to some of the 
above suggestions, agencies should hold very informal confer- 
ences with the poor in their own neighborhoods in order to dis- 
cuss with them contemplated rulemaking affecting such persons' 
interests. 

Agencies should also be urged to pay certain of the personal 
expenses of economically underprivileged witnesses in rulemaking 
hearings where that would help assure adequate representation 
for the poor. In this way the federal agencies may facilitate the 
appearance of an adequate number and variety of poor people's 
representatives in such proceedings. If economically underprivi- 
leged individuals must incur transportation, meal, or babysitting 
costs Jn order to testify on behalf of the poor, of if they must 
lose a day's wages, they should be reimbursed. Unlike the more 
affluent members of our society, poor people cannot afford to 
finance the extra costs involved in representing their own in- 
terests. At the present time most agencies are probably unable 
or unwilling to pay such expenses incurred by underprivileged 
persons seeking to represent the interests of the poor in rule- 
making hearings. In order to remove any doubts as to their 
authority, federal agencies should be expressly empowered, in 
their discretion, to pay the basic personal expenses incurred by 
poor persons acting in such a capacity. 

Each agency administering programs with a high impact on 
the poor should also be urged to constitute, where practicable, a 
formal advisory committee to apprise the agency of poor people's 
interests that should be weighed in the operation of its programs. 
These committees should be composed of persons who are them- 
selves economically underprivileged, or the direct and close repre- 
sentatives of such persons. The committees should be continually 
kept informed of those activities of their respective agencies that 
specially concern them; and they should be consulted for their 
views before the agency makes any rules substantially affecting 
the interests of the economically underprivileged segment of our 
society. All expenses incident to the operation of such advisory 



I 



REC. 5. REPRESENTATION OF POOR 93 

bodies should be borne by the respective agencies. "Regulations 
for the Formation and Use of Advisory Committees" already 
exist.'-'- These might be revised, expanded, and reoriented for this 
purpose. 

In the future, the Administrative Conference of the United 
States should monitor the extent to which federal agencies actu- 
ally do institute specific procedures like those just discussed. 
Government officials must be induced to increase their own af- 
firmative efforts to ascertain the views of the poor with respect 
to rulemaking which affects them substantially. If the Conference 
finds that the recommendations urging voluntary agency action 
in this regard are not adequately affecting official behavior pat- 
terns in practice, it might then recommend that agencies be re- 
quired to follow certain of the above specific procedures with 
respect to particular programs. 

Although federal agencies might, if necessary, be required to 
follow some of the procedures outlined above in specific programs 
or situations, there are a number of reasons why federal agencies 
should not be required to follow certain of those procedures in 
every case where they engage in rulemaking substantially af- 
fecting the poor. These procedures may be completely superflu- 
ous in a number of cases because the views of the poor are 
unmistakably clear and a matter of public record. In addition, 
many of the specific procedures outlined as possible means to 
induce affirmative agency ascertainment of the poor's interests in 
agency rulemaking may be very impractical. The agencies have 
an undisputed need to conduct their affairs inexpensively, simply, 
conveniently, flexibly, and expeditiously. Requirements of the sort 
outlined above may be unusually difficult to draft and administer 
because of the peculiar problems in defining precisely those whose 
views the agency must solicit or appoint as representatives of 
the poor, when or where oral hearings or conferences must be 
held or field surveys taken, and the like. Whether an oral hear- 
ing should be held with respect to a certain proposed rule, 
precisely where and when it should be held, who exactly should 
be invited to testify, and whether a field survey should be made 
are all judgment questions. Someone, probably the rulemaking 
agency, must exercise some discretionary judgment. And to re- 
quire useless hearings, conferences, or field surveys, endless lines 
of repetitive and inarticulate witnesses, and the like, would be to 
interject the worst kind of mischief into the administrative 
process, hamstringing rather than improving it. 



=2 Exec. Order No. 11.007, 27 Fed. Reg. 1875 (1962). 



94 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

However, if federal agencies vi^ill voluntarily follow the pre- j 
vious suggestions in all those situations where they are feasible, ' 
practicable, and necessary to assure that officials are fully in- 
formed about the relevant interests of the poor, the agencies 
will help solve the problem under consideration. The proposals 
outlined in this section have the advantage of assuring self- 
starting and independent affirmative agency action to secure in- 
formation directly from the poor concerning their position with 
respect to rulemaking substantially affecting them. An effective 
pipeline from the poor to those who are responsible for rule- 
making decisions could result. The fact that the government 
would bear the sole or primary financial burden for this mode of 
assuring consideration of the poor's interests in rulemaking also 
enhances its attractiveness and effectiveness. 

C. The Inadequacy of Affirmative Agency Efforts 

Procedures to assure self-initiated affirmative official action to 
ascertain from the poor their views with respect to agency rule- 
making will, if sound in their details, undoubtedly be helpful; 
but such procedures are entirely inadequate solutions for the 
problem at hand in at least one major respect. They do not com- 
pletely compensate for that which the poor currently lack. Eco- 
nomically underprivileged people do not have the resources neces- 
sary to assure a technically sound and consistently available 
articulate presentation of their views concerning rulemaking to 
the appropriate agencies. Those segments of our society with 
adequate economic resources have long employed legal counsel— 
with their special technical proficiencies, knowledge, and skill as 
advocates— for these purposes. By the use of lawyers' professional 
abilities, the well-financed have assured that the kind of repre- 
sentation actually afforded their interests before government 
policy makers is qualitatively high, and much more effective than 
it could possibly be otherwise. 

The poor are entitled to, and must have in order to make their 
interests known effectively, both the quantity and quality of 
representation in rulemaking before federal agencies that com- 
mercial corporations and labor unions consistently utilize. That 
necessitates furnishing the poor, in one way or another, with 
legal counsel for this particular purpose. Because the poor lack J 
the personal and organizational resources to hire such skilled, I 
persistent, and knowledgeable help, affirmative agency efforts of | 
the kind discussed above, although useful, would still result in 
qualitatively inadequate representation in rulemaking for the » 



REC. 5. REPRESENTATION OF POOR 95 

economically underprivileged segment of our society. The reason 
for this is that existing sources of public and private legal aid 
to the poor, such as legal aid and public defender programs, do 
not usually provide the economically underprivileged segments 
of our society with representation in rulemaking. These programs 
are primarily, if not exclusively, concerned with serving the in- 
terests of individual poor clients in adjudicative or potentially 
adjudicative situations. 

III. A Clearinghouse Coordinator? 

The poor might obtain the quantity and quality of represen- 
tation they need for their views in federal rulemaking if a well- 
financed clearinghouse-coordinator organization was created. 
Such an organization could systematically furnish all poor peo- 
ple's groups in this country with information concerning existing 
or proposed federal administrative regulations having a substan- 
tial impact on the poor. In addition, it could encourage and co- 
ordinate participation in federal rulemaking by organizations 
representing the economically underprivileged. Where necessary, 
this entity could also finance participation in rulemaking by vari- 
ous poor people's groups. That is, the clearinghouse coordinator 
might make conditional limited-purpose grants to poor people's 
organizations so that they could individually hire personal legal 
counsel to represent their views in a particular rulemaking mat- 
ter. Such a clearinghouse coordinator would not itself attempt 
to play any direct role as an advocate in the rulemaking process. 
It would not act as a separate representative of the poor. An 
organization of this type could be financed by private contribu- 
tions, government grants, or both, and, it could be constituted 
as an independent private body under the control of all of its 
constituent users in order to assure the maximum satisfaction of 
its clients. 

Utilization of this kind of clearinghouse coordinator has sev- 
eral advantages as a solution to the problem of improved repre- 
sentation for the poor in federal rulemaking. It would encourage 
and facilitate more frequent and continuous representation of 
poor people's interests in the rulemaking process by organiza- 
tions and groups representing some segment of the economically 
underprivileged. The clearinghouse coordinator might also result 
in representation for more of the many divergent and disparate 
interests present in that group in our society loosely character- 
ized here as "the poor" than would otherwise be the case. In 
addition, the existence of such a body might induce a better and 



96 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

more accurate presentation of the views of the poor on many 
matters than might be the case v^ith some other solutions. This 
is true because the source of the views and the representation of 
those views would be relatively close to the poor themselves. 
Since this solution would provide poor people's groups with funds 
to engage their own separate and personal counsel for the pur- 
poses of representation and advocacy in rulemaking proceedings, 
it would assure that the views of those organizations are accurate- 
ly, articulately, knowledgeably, and aggressively presented to 
the agencies in question. 

Still, such a clearinghouse-coordinator organization is probably 
an inadequate and inefficient solution to the problem at hand. 
It assumes that existing organized groups purporting to represent 
the poor can or will do an adequate job of protecting those 
people's interests with respect to federal rulemaking if such bodies 
are kept informed of the facts, their efforts are coordinated, and 
sufficient financing is made available to them. This is a question- 
able assumption, although admittedly it is hard to prove or dis- 
prove entirely on the basis of undisputed evidence. Existing poor 
people's organizations have sometimes been aware of proposed or 
existing rules of special concern to the poor generally, and yet 
have failed to act.=-^ In many of these instances, their failure can- 
not be attributed entirely to a lack of organizational resources. 

It should be reiterated that most poor people do not belong to 
organizations dedicated to protecting and advancing their inter- 
ests ; and the views of "poor people's groups," or of the controlling 
leadership of such groups, may frequently be out of touch with, 
or divergent from, the interests of the mass of the poor. The 
clearinghouse-coordinator proposal will not, therefore, consistent- 
ly assure adequate representation in rulemaking for the collective 
interests of the poor as a general group. The device may assure 
representation in rulemaking only for the views of organized 
poor people's groups, or for the views of the leadership class 
of those groups. Depending on the specific case, that kind of rep- 
resentation may or may not be adequate to protect the interests 
of the mass of the poor people in this country. 

The grant-financed efforts of numerous poor people's groups, 
each seeking to represent separately the interests of the eco- '' 
nomically underprivileged in federal rulemaking, may also be 
unduly duplicatory and therefore wasteful and unnecessarily 

=' The Department of Agriculture's Commodity rHstribution and Food Stamp programs for 
the poor are an example. Although poor people's organizations were aware of the existence of 
those programs and the Department rules under which they were operated, they did not seem 
to take any active interest in those programs until the last year or so. 



REC. 5. REPRESENTATION OF POOR 97 

burdensome to the administrative process. Furthermore, many- 
administrative difficulties will appear in any effort to entrust a 
mandatory grant-making responsibility to the clearinghouse coor- 
dinator. Must every organizational applicant seeking funds with 
which to represent the poor in federal rulemaking be financed? 
If not, which groups in any given situation should be financed? 
These difficulties could be largely avoided if, depending on the 
facts of each case, the clearinghouse coordinator had the option 
of representing the interests of the poor itself or contracting 
with others to do so. In addition, freedom for each poor people's 
organization to hire its own separate lawyer for these purposes 
may be much more expensive and less effective than providing 
the poor with one specialist law firm working full time to repre- 
sent their collective interests in federal rulemaking. 

For all of the above reasons the clearinghouse-coordinator ap- 
proach to solving this problem is inadequate. It is too likely to 
result in uneven and inconsistent representation for the collec- 
tive interests of the poor as a class in federal rulemaking. More- 
over, it seems relatively uneconomical and inefficient. As subse- 
quent discussion will demonstrate, a more desirable solution to 
the problem under consideration can be formulated. That solution 
could assure more adequate representation for the poor in federal 
rulemaking than the clearinghouse coordinator. At the same time, 
it could also incorporate, by one means or another, most of the 
special advantages of the clearinghouse coordinator. 

IV. The Independent Poor People's Counsel 
A. Generally 

The most desirable solution to the problem under consideration 
would seem to be the creation of a people's counsel organization 
which would hire a staff to represent the interests of the poor in 
all federal rulemaking that substantially affects them.-* Such a 



"This seems to be the general philosophy of the Feighan BiU, H.R. 17974, 90th Cong.. 2d 
Sess. (1968), the text of which follows: 

Be it enacted by the Senate and House of Representatives of the United States of Ameri- 
ca in Congress assembled. That it is fundamental to wise administrative rulemaking that, 
except in limited or unusual circumstances, persons whose interests may be affected be as- 
sured of an opportunity to participate in rulemaking through submission of data, views, or 
arguments to the responsible rulemaking agency. Rulemaking frequently affects persons 
without the resources necessary to keep themselves informed concerning proposed rules or to 
petition for rules or amendment or repeal of rules. Hence it is necessary that means be 
provided whereby, insofar as feasible, the interests of such persons may be protected in 
rulemaking and whereby the rulemaking process may be benefited by advocacy on behalf 
of such interests. 

SEC. 2. Section 553, in chapter 5, Administrative Procedure, of title 5, United States 
Code, is hereby amended by adding thereto the following subsection : 

"(f) The Attorney General is directed to enter into contracts with, or to make grants 



98 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

counsel would be an artificial representative for the poor in this 
process without any pretense of being- a democratically chosen 
spokesman of the poor. This counsel, as an advocate, would be 
charged with the responsibility of separately and independently 
representing the collective interests of the poor as a class in all 
federal rulemaking. Where the interests of the poor on a pending 
rule are divergent, it would also be responsible for assuring the 
representation of those disparate views either in its own presen- 
tation or by other individuals or organizations. In performing 
its representational responsibility for the economically under- 
privileged, such an advocate would be under an affirmative duty 
to seek the advice and help of relevant sources of every kind, 
whether private or governmental, individual or organizational. It 
would be obliged to use every device available to keep in as close 
touch as possible with the needs and views of those whose in- 
terests it purports to represent. Although such a counsel's staff 
would probably be middle class, great pains should be taken, 
and special procedures instituted, to prevent it from being cap- 
tured or dominated by a middle-class point of view. 

As an aid in this respect, it might be desirable to establish 
official advisory committees to the poor people's counsel in each 
area of major concern such as welfare programs, housing, em- 
ployment, education, and so forth. The membership of such com- 
mittees should be composed of individuals who are as representa- 
tive of the poor of this country as possible. These committees 
should not, however, become the exclusive source for the poor's 
communication with their people's counsel. There is always a 
danger that committee members, regardless of the care exercised 
in their appointment, may have divergent views and interests 
from the mass of the economically underprivileged. For this 
reason, the people's counsel should hold informal hearings among 

subject to appropriate conditions to, the National Legal Aid and Defender Association, or 
such other nationally organized nonprofit bodies with generally similar objectives as he 
may deem desirable, whereby such body or bodies may be provided with funds to enable them 
to participate in rulemaking in accordance with this section on behalf of interested persons 
who, because of their lack of personal resources, are unable effectively to do so. Any such 
body shall be deemed to be an interested person for the purpose of this section. Such body 
or bodies may contract with other persons to aid in effectuating the purposes of such con- 
tract or grant. The Attorney General is authorized to adopt such rules or regulations as may 
be appropriate to the administration of this subsection. He is authorized, further, after 
consultation with the agency involved, by order to make this section applicable to matters 
relating to public property, loans, grants, benefits, or contracts in circumstances where he 
determines that such matters so affect the interests of persons of limited means as to make 
it appropriate that, in connection with rulemaking with respect to such matters, a body 
or bodies receiving a contract or grant under this subsection should have an opportunity to 

represent such interests." 

SEC. 3. There are hereby authorized to be appointed such funds as are necessary to 

carry out the provisions of section 2. 
Senator Hart introduced the same bill in the Senate as S. 3703, 90th Cong., 2d Sess. (1968). 



REC. 5. REPRESENTATION OF POOR 99 

the poor on the larger and more important issues so that it can 
better represent their interests on those subjects. Close liaison 
between the people's counsel and Office of Economic Opportunity 
(OEO) community action groups, legal aid societies, civil rights 
organizations, and other poor people's groups throughout the 
country is also crucial. This will help to assure that the people's 
counsel will remain as reflective as possible of the real interests, 
views, and needs of those people in our society that it ultimately 
must serve. 

B. Specific Functions of the Poor People's Counsel 

The people's counsel would do everything necessary to repre- 
sent effectively the interests of the poor in all federal rulemaking 
substantially affecting them. Such a body would perform most 
of the same functions for the poor with respect to the federal 
rulemaking process that Washington law firms perform for their 
well-financed clients. It would monitor the activities of federal 
agencies to assure that it is fully informed with respect to all 
rulemaking or potential rulemaking affecting the interests of the 
poor. When a federal agency proposes new rules of concern to 
the economically underprivileged, counsel for the poor would 
present their views on the desirability of the proposed regula- 
tions and actively lobby for the interests of the poor. This would 
include the drafting of substitute rules for the ones suggested by 
the government agency. Additionally, the people's advocate would 
formulate, and urge the appropriate authorities to adopt, en- 
tirely new rules and revisions of old rules substantially affecting 
poor persons. To perform these functions, the people's counsel 
would need an adequate staff not only of lawyers, but also of 
economists and other social scientists. This would assure that it 
will be capable of competently responding in kind to the argu- 
ments and technical data presented by the personnel of the var- 
ious agencies with which it must deal. 

In addition, the poor people's advocate would be charged with 
some of the specific obligations of the clearinghouse coordinator. 
That is, it would keep organizations representing the poor in- 
formed as to all federal rulemaking affecting their interests, and 
it would coordinate and facilitate those organizations' separate 
participation in such rulemaking if any of them had the desire 
and capacity to do so. 

The people's counsel should also be authorized, in its discre- 
tion, to make contracts with other organizations as a means of 
helping to represent, in the rulemaking process, minority or di- 



100 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

vergent viewpoints with respect to the interests of the poor. Inter- 
jection of such minority or divergent views into the rulemaking 
process may be a function that the people's counsel will want to 
contract out to others because, by doing so, it might avoid some 
possible internal conflicts of interest in its organizational setup. 
The extent to which this contracting power is actually used ought 
to be left to the sole discretion of the people's counsel. Neverthe- 
less, the expectation is that the staff of the people's counsel will 
normally perform all of the representation functions assigned to 
it. 

The people's counsel would occasionally propose to the Presi- 
dent or Congress, or both, new legislation (or executive orders) 
geared to institute reforms in administrative programs substan- 
tially affecting the poor. An agency may refuse to exercise its 
existing authority to make the kind of rules deemed necessary by 
the people's advocate to protect the interests of its constituency. 
Or an agency willing to make such rules may not have the author- 
ity to do so because legislation forbids it or fails to authorize it. 
In all of the above cases Congress can correct the situation by 
statute and thereby ensure the promulgation of rules satisfactory 
to the people's counsel. As a result, the advocate of the poor 
should be empowered to propose legislation to Congress or the 
President when that would be an aid in performing its primary 
responsibility— effectively representing the poor's collective in- 
terests in federal rulemaking. 

The people's counsel should also be empowered to play an in- 
dependent role in the judicial review of federal administrative 
rules. As a representative of the poor, the counsel should be able 
to challenge in court, under its own name, the validity of any 
federal rule substantially affecting poor persons. Only with this 
authority will the views of the people's counsel have any creditable 
weight with the agencies before which it is to operate. The image 
and attendant effectiveness of the people's advocate will be great- 
ly enhanced if federal agencies know that the people's counsel 
can freely institute judicial review of agency rules under its 
own name and solely on its own initiative. Absent that authority, 
the people's counsel might be totally ignored by the administra- 
tive establishment; ofl^cialdom would know that there is little 
bite behind the counsel's bark. Power to seek judicial review of 
an agency's rules on the ground that they are unauthorized, are 
in conflict with a statute, are unconstitutional, or have been pro- 
mulgated without the required procedure is, therefore, very im- 
portant. The poor's advocate should not be forced to give up 
after it unsuccessfully opposes the promulgation of a certain rule 



REC. 5. REPRESENTATION OF POOR 101 

that is antithetical to the interests of the economically under- 
privileged if that rule is vulnerable to attack in the courts. 

The ability to sue in its own name as an official i-epresentative 
of the poor is also especially important to the people's counsel 
because that right frees the counsel from any dependency on 
particular poor persons who would otherwise have to be the 
named plaintiffs in such suits. Since it is responsible for repre- 
senting the collective interests of the poor, the people's counsel 
should not be put in the position of having to reconcile that duty 
with the individual interests of a particular poor person acting as 
official plaintiff in a court case. In addition, if the poor people's 
advocate can sue in its own name, many administrative difficul- 
ties and extra expenses can be avoided. Congress should therefore, 
specifically vest the people's counsel with this right. Delegation of 
that authority to such a counsel would not, of course, preclude 
other individuals and organizations with standing from seeking 
judicial review of federal agency rules on behalf of poor people's 
interests. 

A very broad precedent supporting the right of a representative 
body to seek judicial review of administrative action adversely 
affecting those w^hose interests it seeks to protect is Office of 
Co7nmunicatio7i of the United Church of Christ v. FCC."^ That 
case held that a church has standing as a "party in interest" 
to seek judicial review as a representative of its members as 
listeners whose interests the FCC is required to protect. Since 
that organization was a voluntary-membership body seeking to 
assert the rights of persons who freely chose to join it, the 
Church of Christ case might be distinguished from the situation 
under consideration here. However, if an act of Congress ex- 
pressly authorized the people's counsel to seek judicial review of 
federal rules having a substantial impact on the poor, in its 
own name as an official representative of such persons, the stand- 
ing of that counsel would be clear. Of course, a question might be 
raised whether a case or controversy exists in a judicial proceed- 
ing pitting an artificial poor people's representative accorded such 
a statutory right to judicial review against an agency whose 
rules are challenged on behalf of the poor. However, it seems 
clear that one exists. A statute of Congress would impose a 
legal duty on the people's counsel to protect the interests of 
underprivileged persons in federal rulemaking — a duty that would 
include attempts to invalidate improper rules in court; and the 
various federal agencies have an adverse legal obligation to de- 



"359 F.2d 994 (D.C. Cir. 1966). 



102 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

fend the integrity of their rules against attack by others. Some 
might argue that Muskrat v. United States -® casts doubt upon the 
ability of such a people's counsel to sue in its own name as a 
representative of the poor, even after Congress specifically em- 
powers it to do so. But that case is probably no longer the law." 

As a wise allocation of its resources, the people's counsel may 
frequently elect to assist other agencies representing the poor to 
prosecute court cases relating to the validity of federal adminis- 
trative regulations instead of instituting such suits itself. To 
this end it might distribute to appropriate legal aid organizations 
memoranda explaining that specified regulations may be subject 
to successful attack in the courts. In addition, the people's advo- 
cate could give technical or financial aid to a local legal aid 
organization attempting to prosecute, on its own, a test case con- 
cerning some federal rule that is inconsistent with the poor's 
interests. The people's counsel could also generally coordinate 
the efforts of legal aid groups with respect to the judicial review 
of federal agency rules. 

The people's counsel should also be empowered to intervene 
under its own name on behalf of the poor in those agency ad- 
judicative proceedings substantially affecting the economically 
underprivileged. The poor as a group may have as vital an in- 
terest in the outcome of certain agency adjudication as they do 
in most rulemaking proceedings affecting them. Many very im- 
portant administrative policies are established as a result of ad 
hoc agency adjudication. At present, the collective interests of 
economically underprivileged people are inadequately represented 
in such federal administrative adjudication; effective partici- 
pation in those proceedings requires certain skills and expertise 
not available to most local legal aid societies who have had little 
experience with the intricacies of adjudication before federal 
agencies. Therefore, apportioning this function to the poor 
people's counsel seems wise. 

Representation of the poor in agency adjudicative proceedings 
is closely and intimately tied to the counsel's other responsi- 
bilities. Assigning this function to the people's advocate will 
economically utilize the expertise in federal administrative law 
that it will necessarily acquire through the performance of its 
other duties. However, the people's counsel will not be empowered 
to initiate adjudicative proceedings before federal agencies in 



''219 U.S. 346 (1911) (holding that Congress could not authorize named Cherokee Indians to 
institute suits on their own behalf and on behalf of other Cherokees having similar allotments 
to determine the validity of acts of Congress restricting alienation of certain land and in- 
creasing the number of persons entitled to share in it). 

''See K. Davis, Administrative Law Text 374 (1959). 



REC. 5. REPRESENTATION OF POOR 103 

its own name; as an official representative of the poor, it will be 
limited to participating in such proceedings as an intervenor. 
Where necessary, traditional channels of legal aid can be expected 
to initiate such agency adjudicative proceedings in the name of 
individual economically underprivileged clients. 

Ordinarily the people's counsel should not perform the respon- 
sibilities of an ombudsman or personal legal counsel. That is, it 
5-hould not normally handle the individual grievances of, or seek 
remedies for, particular poor clients. An ombudsman or personal 
legal counsel becomes preoccupied with the details of numerous 
individual claims and is therefore likely to lack a sufficiently 
broad independent perspective about the best ways of serving 
the poor as a whole. If it acted to represent particular clients, 
the proposed body's individual caseload would be much larger 
than its job of affirmatively representing the poor as a class in 
federal rulemaking. As a result, the latter function may be oblit- 
erated by the former function. In addition, since all citizens, 
rich or poor, may experience administrative arbitrariness and 
ineptitude, all should have access to an ombudsman. But to be 
effective, the office contemplated here must concentrate on and 
become expert in the special problems of the poor. It must look 
at these problems and proposed solutions solely from the view- 
point of the poor. Furthermore, the people's counsel should be 
primarily concerned with affirmatively representing the interests 
of such individuals prior to, and as a means of avoiding, their 
need for an ombudsman ; but because of the nature of an om- 
budsman's responsibility, a people's counsel charged with that 
additional function may see the needs for affirmative representa- 
tion in rulemaking primarily in terms of the poor's appearance 
in its office for ombudsman's help. However, there may be very 
rare occasions when the people's counsel should be able to repre- 
sent a particular person because that is the best or only means 
by which to test a certain agency policy affecting the poor as a 
class. In those cases it should be free to do so, but only if ab- 
solutely essential to its primary function as advocate for the 
collective interests of the poor in federal rulemaking. 

Finally, it should be recognized that the interests of the poor 
and the interests of higher income groups may sometimes be 
identical with regard to certain rulemaking or agency adjudi- 
cation. To assure adequate representation for the economically 
underprivileged, the people's counsel must have the independent 
authority to participate on behalf of the poor in all rulemaking 
and agency adjudication of concern to those people. However, 
a wise allocation of the advocate's resources should lead it to 



104 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

concentrate its efforts on representation of the poor in those 
situations where the interests of the poor are not adequately 
protected by the endeavors of other more affluent groups. 

C. Locating and Structuring the People's Counsel 

1. A Government Office of People's Counsel — The proposed 
people's counsel might be constituted as a permanent, single- 
purpose, and relatively independent federal government office 
located outside of any agency before which it would have to rep- 
resent the poor. A number of arguments of varying merit have 
been made in favor of making the poor's advocate an integral 
part of the governmental establishment. It has been contended 
that federal agencies might be more receptive to a presentation 
of the poor's views by another part of the official establishment 
than by outsiders. Therefore, the argument continues, as a part 
of the governmental structure the people's counsel might be more 
effective than if it were outside of that structure. If it were 
part of the official establishment, such a people's counsel might 
also be accorded access to useful information and resources that 
it otherwise might not be able to obtain. Furthermore, indicat- 
ing that representation of the poor's interests has special im- 
portance by making it a part of the government itself might 
give the economically underprivileged the feeling that the official 
establishment really cares about their interests. As a govern- 
ment office, the people's counsel might also have a certain pres- 
tige and respectability not otherwise obtainable which would 
facilitate the recruitment and retention of a competent staff. 
In practice, many of these assertions about the advantages of 
placing the people's counsel inside of government may prove to 
be unrealistic or erroneous. Moreover, location of the people's 
counsel as a part of government may actually be disadvanta- 
geous for a number of reasons. As a full-time employee of the 
United States Government, the poor's advocate is more likely 
than otherwise to become, at least over time, a captive of the es- 
tablishment — out of touch with the poor, docile, and therefore in- 
effective. After all, a certain in terrorem effect would always 
exist because the appropriations for the office would continually 
be subjected to congressional approval. And the professional 
associations of the staff of the people's counsel under these cir- 
cumstances would be with other government officials, all work- 
ing for the same principal, and all having common interests 
and problems in the long run. 

The idea that a government agency can do an effective job be- 



REC. 5. REPRESENTATION OF POOR 105 

cause it would be a member of the team is chimerical. One of 
the basic strengths of our legal system is its reliance on the ad- 
versary system. The handling of things by a member of the 
team smacks of "Big Brotherism." The poor would probably lack 
confidence in a people's counsel who, although charged with 
representing their interests, was part of the very government 
establishment they wanted to influence. The poor might well be- 
lieve, regardless of actual performance, that any full-time govern- 
ment employee purportedly representing their interests was 
really not doing so. Furthermore, the underprivileged segments 
of our society seem to reject the basic philosophy underlying 
the approach that would appoint a government official to repre- 
sent their interests. In the past few years the more militant 
elements of the poor have demanded that the poor themselves 
be accorded a direct voice in controlling their destiny. Finally, 
locating the people's counsel as a part of the federal estab- 
lishment may make it less effective than otherwise possible be- 
cause its freedom to innovate and experiment may be curtailed 
by government red tape and bureaucratic requirements. 

There is some precedent supporting the suggestion that a spe- 
cial government house counsel be created to represent a group 
unable to represent effectively its own interests before federal 
agencies because of its large size, amorphous nature, and lack 
of organization. There was an independent Office of Consumers' 
Counsel charged with asserting consumers' interests in bitumi- 
nous coal proceedings before the National Bituminous Coal Com- 
mission.-'' The Department of Agriculture also had, at one time, 
a Division of Consumers' Counsel which participated in proceed- 
ings within that department on behalf of consumers.^^ A similar 
position seems to have existed for a period in the National 
Recovery Administration, the Department of Labor, and the 
Department of the Interior.'" More recently, President Johnson 
announced the creation of the Office of Consumer Counsel in the 
United States Department of Justice.^^ This new office did not 
begin to function until the very end of 1968 because the first 
appointee died before he could assume his duties. The status of 
the office is now unclear due to the change in national administra- 
tions. In any case, the newly created Office of Consumer Counsel 
would not be an adequate solution for the problem at hand since 



=s 1968-69. U.S. Government Organization Manual 687, 708. 

=» Id. at 691. 

^ Id. at 687. 

" See White House Press Conference of Betty Furness, Special Assistant to the President on 
Consumer Affairs, and Attorney General Ramsey Clark discussing the establishment of this 
office (mimeo Feb. 6, 1968). 



106 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

the interests of the poor affected by the rulemaking process are 
substantially broader than those interests deriving from their 
status as consumers., 

History may support the idea that t, people's counsel of the 
sort contemplated here should not be constituted as a part of 
the government establishment. Almost all of the consumer's coun- 
sel offices organized as separate entities within the federal es- 
tablishment have atrophied and disappeared. Most of them seem 
to have faded because, among other things, they were ineffective 
and made no significant contribution to the administrative proc- 
ess. Although not completely clear, the reasons for the conspicu- 
ous lack of success of these offices seem to have included their 
intimate connection with the government establishment (as an 
official and integral part of it), and their structural position 
within that establishment — that is, the fact that they were lo- 
cated inside of the very agencies before which they were to repre- 
sent the consumer's interests. '^^ 

2. A Private Office of the People's Counsel — A second means 
of constituting the people's counsel is to utilize a private organi- 
zation outside of government for these purposes. By relying on 
a body outside the federal establishment, the people's repre- 
sentative in rulemaking proceedings may be able to be more 
closely tied to and identified with the needs of the poor than 
would be possible if it were an official organ of the United States 
Government. A nongovernmental body may also be able to com- 
municate more effectively with the poor than an official one. As 
a private organization separated from the government hierarchy, 
it may be less susceptible to being captured by the ideas and 
values of the government agencies before which it would repre- 
sent the interests of the poor. A private people's counsel may 
also be less susceptible than a similar public counsel to intimida- 
tion by government agencies; if so, the private organization 
would be a more aggressive and persistent representative of the 
poor's interests in rulemaking than a public body. 

As suggested above, such a private body may also be more 
flexible and thus better able to experiment and innovate in the 
performance of its assignment than a government-based equiva- 
lent. This greater freedom may be especially useful with respect 



'^ On the operation of these consumer counsels see generally R. Baker, The National Bi- 
tuminous Coal Commission: Administration of the Bituminous Coal Act, 1937-1941 at 
221-53 (1941) ; H. Johnson, The Blue Eagle from Egg to Earth 295-96 (1935) ; L. Lyon, P. 
HoMAN, G. Terborgh, L. Lorwin, C. Dearing, & L. Marshall, The National Recovery Ad- 
ministration 123-28, 210-14 (1935) ; Lewis, The "Consumer" and "Public" Interests Under 
Public Regulation, 46 J. Pol. Econ. 97, 103-06, 106 n.lO (1938) ; E. Nourse, J. Davis, & J. 
Black, Three Years of the Agricultural Adjustment Administration 391-95 (1937). 



REC. 5. REPRESENTATION OF POOR 107 

to recruiting a staff and administering its activities. Moreover, 
this freedom may mean that a private people's counsel would be 
more efficient in the long run than a government body. As noted 
earlier, the poor are likely to have greater confidence in a private 
counsel's representation of their interests than in a public coun- 
sel's performance of that job because their advocate would not 
be part of the very establishment which they are trying to in- 
fluence. The actions of a private counsel may also be more visible 
to the poor than the actions of a public counsel which could 
easily get lost in the huge federal bureaucracy and become rela- 
tively invisible to outside viewers. This greater visibility might 
make a private counsel more responsive to the interests of the 
poor and a greater source of satisfaction to them. 

On the other hand, it has been urged that such a private or- 
ganizational representative of the poor might not be as influential 
or effective in rulemaking proceedings as an official agency of the 
United States charged with the same obligation. By virtue of 
its oflficial status, a public people's counsel charged with repre- 
senting the poor may be offered greater cooperation and oppor- 
tunity for participation in rulemaking affecting the poor than a 
private organization charged with the same duty. In addition, 
a private people's counsel may not be, in and of itself, as 
effective a mechanism as a public people's counsel to convince 
the poor that the federal government really wants their interests 
represented in its rulemaking process. A more likely disadvantage 
of a private body might be its greater susceptibility to capture 
by the interests of some small segment of the poor, with the 
result that it would only serve the interests of that special group 
among the poor rather than the interests of the poor as a whole. 
However, this disadvantage can be offset by structural devices 
geared to avoid that situation; and it must be weighed against 
the specific advantage that the private organization is less sus- 
ceptible to being captured by the "government view" and more 
likely to be in close touch with the real needs of the poor. 

3. The Public Broadcasting Corporation Model: A Compro- 
mise Solution — A third solution to the problem of properly posi- 
tioning the people's counsel is a beneficial compromise between 
the alternative of locating the advocate for the underprivileged 
inside the federal government and locating it entirely outside 
and separate from that establishment. The poor's representative 
described herein could be constituted as a completely independ- 
ent, federally chartered corporation similar in most respects to 
the recently created Corporation for Public Broadcasting ^^ or 

"47 U.S.C. § 396 (Supp. Ill, 1965-1967). 



108 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

the long" established American National Red Cross."" These orga- 
nizations are hybrid public-private bodies. As such, they provide a 
model for the people's counsel which may combine the advan- 
tages of the purely public body with the advantages of the purely 
private body and minimize the disadvantages of each. 

The Corporation for Public Broadcasting, for example, was 
created by a special act of Congress as an independent, non- 
profit, and no-stock entity.^' It is headed by a bipartisan body 
of fifteen members whose qualifications and fixed terms of of- 
fice are set by statute. They are appointed by the President with 
the advice and consent of the Senate and are authorized to make 
policy for the body and direct its affairs. The act creating the 
corporation specifies its purposes and powers. It also expressly 
authorizes the body to obtain grants from, and make contracts 
with, individuals and private and governmental organizations 
and institutions. According to the statute, the Corporation for 
Public Broadcasting must submit detailed annual reports to the 
President and Congress outlining the activities, financial condi- 
tion, accomplishments of the organization, and any recommen- 
dations it deems appropriate. In addition, the statute requires an 
annual audit of the corporation's books by an independent cer- 
tified public accountant. The financial operations of the body 
and its grantees' use of corporation funds may also be audited 
by the United States Government for those fiscal years during 
which federal funds are involved. 

But the public broadcasting body is otherwise independent of 
federal authority and is more nearly private than public. The 
statute specifically declares that it is not "an agency or establish- 
ment of the United States Government." ^^ Neither the directors 
of the corporation nor its agents are federal employees by virtue 
of their connection with the organization. In addition, full-time 
federal government employees are specifically excluded from ap- 
pointment to the governing board of the corporation. Finally, 
the enabling act expressly notes that nothing contained in any 
of its provisions "shall be deemed ... to authorize any de- 
partment, agency, officer, or employee of the United States to 
exercise any direction, supervision, or control . . . over the Cor- 
poration or any of its grantees or contractors. . . ." ^^ 

The private corporate structure of a people's counsel modeled 
after the Corporation for Public Broadcasting assures it the ad- 



3^36 U.S.C. § 1 (1964). 

'M7 U.S.C. § 396 (Supp. in, 1965-1967). 
^47 U.S.C. § 396(b) (Supp. HI, 1965-1967). 
"47 U.S.C. § 398 (Supp. m, 1965-1967). 



REC. 5. REPRESENTATION OF POOR 109 

vantages of a purely nongovernmental body. An organization 
of this kind is effectively insulated from federal control of its 
day-to-day policy determinations. It can aggressively represent 
the interests of the poor before federal agencies and advocate 
views distasteful to officialdom without fear of crippling govern- 
ment intervention. Such a body is also free, because of its private 
organizational structure, of all of the operational rigidities and 
inflexibility associated with a government agency. Like a purely 
private entity, such a corporation is not bound by the rules of 
the federal bureaucracy with respect to such things as the hiring 
and compensation of staff, and the means by which its business 
is conducted. Consequently, this corporate entity will have as 
much freedom to experiment and adapt its practices to changing 
exigencies as a purely private organization. The structure of a 
corporation of this kind also permits it to draw very easily on 
both public and private means of support without unduly com- 
plicating the organization's affairs or threatening its independ- 
ence in the way that a government agency's independence would 
be threatened. 

In addition, a people's counsel corporation of the type under 
discussion here, like a purely private entity of that sort, can be 
more closely tied to, and identified with, the needs of the poor 
than a similar government body. This can be achieved by stipulat- 
ing certain specific qualifications for appointment to the 
organization's private governing board. Similarly, an entity mod- 
eled after the Corporation for Public Broadcasting may also be 
able to communicate with the poor more easily and flexibly than 
if it were a direct part of the federal establishment. Because 
this kind of entity is not part of the "official government team," 
it may be less susceptible than a purely public body to being in- 
timidated or captured by the ideas, values, and interests of the 
agencies with which it deals. The economically underprivileged 
may also have more confidence in a people's counsel structured 
in this way than in one located within the federal government; 
it is apparently independent of federal influence and is controlled 
by a private board structured to reflect the interests of the poor. 
The actions of such a government-chartered but independent 
counsel may also be more visible to the poor than a similar 
government counsel lost inside the vast federal establishment. 

If the people's counsel were constituted as a body like the 
Corporation for Public Broadcasting, it would also have many of 
the important advantages of a government-based people's coun- 
sel. In quasi-public form, it may have higher status and prestige 
than a purely private people's counsel. Thus, it might well be 



110 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

able to secure a more qualified staff and a stronger board of di- 
rectors than could a private body. Such an organization can 
easily be funded by the national government and can deal to 
some extent as an official equal with federal agencies. As a 
quasi-official body, federal agencies might be more receptive to 
its presentation of the poor's views than if those views were pre- 
sented by a purely private body; and, a quasi-official people's 
counsel might be accorded access to information and resources 
not as easily obtainable by a purely private entity. This seems 
to have been true of the Red Cross, for example. Constituting 
the people's counsel as such a quasi-official body might also give 
the poor a feeling that the federal government itself really cares 
about them and is attempting to ensure fair representation for 
their views with respect to rulemaking that vitally affects their 
interests. At the same time, the independent structure of the 
people's counsel organization assures the poor that a meaningless 
"Uncle Tom" has not been created. 

The above discussion suggests that the best way of structuring 
the people's counsel is to establish it as a quasi-public body 
modeled on the Corporation for Public Broadcasting. At the start, 
such a body would, of course, require action by Congress. After 
it was set up, it would not be dependent on the government to 
any appreciable extent except perhaps for part of its financing — 
an aspect which will be discussed below. Careful drafting of the 
enabling statute should assure the creation of an effective and 
meaningful advocate for the poor in all federal rulemaking sub- 
stantially affecting them. 

D. Financing the People's Counsel 

Financing the people's counsel raises additional problems. It 
is clear that a rather large infusion of new money will be needed 
to support such an entity on a long-term, continuing, and effec- 
tive basis. Resources currently available to the poor and their 
organizational representatives are totally inadequate to support 
this new responsibility in any satisfactory way. The source of the 
extra money required could be federal, private, or both. Utiliza- 
tion of federal money for this purpose has some distinct advan- 
tages. The function which must be performed is too important 
and urgent a part of the federal administrative process to en- 
trust its support to the uncertainties of private fund raising. 
Only an infusion of federal money can guarantee, relatively soon, 
the kind of funding that is necessary for this project to assure 
proper, immediate representation of the type contemplated here. 



REC. 5. REPRESENTATION OF POOR 111 

The circumstances of the era in which we live suggest that it is 
too late to talk solely in terms of a short-term demonstration 
project. What is needed — and needed now — is adequate repre- 
sentation for the poor in federal rulemaking on a permanent, 
reliable, and quantitatively sufficient basis. 

However, it may be possible to secure the funds needed to pro- 
mote a quasi-public people's counsel from nongovernmental 
sources. Large charitable foundations might provide a long-term 
guarantee of adequate revenue, especially if they understood the 
vital and special importance of this particular project. In addi- 
tion, individual and business contributors might be induced to 
support such a body in the same way that they support charities 
such as legal aid societies. However, to attract substantial gifts 
of private funds from individual or business donor, the people's 
counsel corporation must be a tax exempt charity. In order to 
clear up any doubts on that subject. Congress should specifically 
stipulate in the statute creating the people's counsel that it is 
tax exempt for these and other purposes. 

A number of arguments suggest the long-term desirability of 
financing such a people's advocate exclusively from nongovern- 
ment funds if that should prove practical, feasible, and realiz- 
able sufficiently quickly. As a contractor with the federal gov- 
ernment — bound to provide in return for monies furnished the 
representation required — the people's counsel becomes, to some 
extent at least, a tainted instrument of the government in the 
eyes of the poor. Even if it is not true, the poor may feel that 
their counsel will not bite the hand that feeds it. Furthermore, 
because of the grant-making agency's authority to discontinue 
grants to the people's counsel, that agency will be in a position to 
exert pressure on the advocate for the poor which might be dele- 
terious to the most vigorous performance of its duties. If fhe 
people's counsel even fears that aggressive and persistent repre- 
sentation in rulemaking of certain unpopular views favoring 
the poor might induce a withdrawal of federal funds, it may 
become timid, lethargic, and unnecessarily cautious. In addition, 
a grant of federal funds is rarely made without relatively 
detailed conditions, and such strings might remove some of the 
desirable flexibility and capacity to innovate and experiment nor- 
mally possessed by a privately financed operation of the same sort. 

However, the above objections to the use of federal funds are 
not sufficiently important to be controlling if government money 
is in fact necessary to finance such a people's counsel quickly, 
adequately, and on a long-term basis. If government financing is 
required, the OEO might logically be considered as a funding 



112 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

agency. The sole purpose of the OEO is to help the impoverished 
of this country. In addition, it is in an especially good position 
and has the specialized resources to evaluate the faithfulness 
and effectiveness with which the people's counsel represents the 
interests of the poor. Through its Community Action Programs, 
Vista Volunteers, Legal Service Offices, and Job Corps Centers! 
the OEO is in daily, intimate contact with the poor. It also has 
the advantage of a broad and continuing experience with the 
poor and their special needs and problems, and a particular in- 
terest in providing funds to secure adequate legal representation 
for the economically underprivileged. Empowering the OEO 
Legal Services Program to make grants to a people's counsel 
for the purposes outlined in this Article might just round out this 
federal agency's current attack on inadequate legal representa- 
tion for the poor generally. 

On the other hand, there is a very persuasive reason to appoint 
another federal agency as the grant-making body. The OEO is 
one of the most significant federal agencies making rules with a 
substantial impact on the poor. That body will, therefore, be 
one of the agencies before which the people's counsel will con- 
tinuously have to represent the collective interests of the poor. 
If the OEO were designated as the agency to finance the people's 
counsel it would necessarily be put in a position whereby it 
could influence — perhaps detrimentally — its grantee's represen- 
tation of the poor with respect to the OEO's rulemaking. Regard- 
less of the purity of the OEO's actions in this regard, such a 
structural situation might cause the people's counsel to be un- 
necessarily timid in representing the poor's interests before the 
OEO. Designation of the OEO as grant maker for this purpose 
would also make less credible to the poor the efforts of the 
people's counsel to represent their interests before the OEO. Even 
if it were untrue, the poor might think that their counsel would 
be likely to play ball with its benefactor. For these reasons, 
any government grantor of funds to support the people's counsel 
should not be an operating agency whose programs have a large 
impact on the poor. 

V. Section 4 of the Administrative Procedure Act 
A. Generally 

Even if the above recommendations are adopted, there is in- 
adequate assurance that the interests of the poor will be repre- 
sented in federal rulemaking unless some means is devised by 



REC. 5. REPRESENTATION OF POOR 113 

which to guarantee such persons notice of proposed regulations 
substantially affecting them and an opportunity to submit their 
views to the proper authorities. The required notice and oppor- 
tunity-to-participate provisions of section 4, subsections (b)-(e) 
of the APA might be adequate for this purpose were it not for 
the blanket exemptions from those provisions found in section 
4(a).''« 

A majority of the federal administrative programs substantial- 
ly affecting the poor are excepted from the notice and opportunity 
to participate requirements of subsections (b)-(e) by the ex- 
emption for matters relating "to public property, loans, grants, 
benefits or contracts" found in subsection (a)(2). This means 
that in rulemaking for most programs of special concern to the 
poor, federal agencies need not give any notice of proposed regula- 
tions in the Federal Register. Similarly, in the excepted situa- 
tions, federal agencies need not allow "interested persons," 
including the poor or their representatives, to participate in rule- 
making "though the submission of written data, views, or argu- 
ments" or through "the right to petition for the issuance, 



» Administrative Procedure Act § 4, 5 U.S.C. § 553 (1964): 

(a) This section applies, according to the provisions thereof, except to the extent that there 
is involved — 

(1) a military or foreign affairs function of the United States; or 

(2) a matter relating to agency management or personnel or to public property, loans, 
grants, benefits, or contracts. 

(b) General nature of prepared rulemaking shall be published in the Federal Register, 
unless persons subject thereto are named and either personally served or otherwise 
have actual notice thereof in accordance with the law. The notice shall include — 

(1) a statement of the time, place, and nature of public rulemaking proceedings; 

(2) reference to the legal authority under which the rule is proposed; and 

(3) either the terms or substance of the proposed rule or a description of the subjects 
and issues involved. 

Except when notice or hearing is required by statute, this subsection does not apply — ■ 

(A) to interpretative rules, general statements of policy, or rules of agency orga- 
nization, procedure, or practice; or 

(B) when the agency for good cause finds (and incorporates the finding and a 
brief statement of reasons therefor in the rules issued) that notice and public 
procedure thereon are impracticable, unnecessary, or contrary to the public 
interest. 

(c) After notice required by this section, the agency shall give interested persons an oppor- 
tunity to participate in the rulemaking through submission of written data, views, or 
arguments with or without opportunity for oral presentation. After consideration of 
the relevant matter presented, the agency shall incorporate in the rules adopted a con- 
cise general statement of their basis and purpose. When rules are required by statute to 
be made on the record after opportunity for an agency hearing, sections 556 and 557 of 
this title apply instead of this subsection. 

(d) The required publication or service of a substantive rule shall be made not less than 
30 days before its effective date except — 

(1) a substantive rule which grants or recognizes an exemption or relieves a restriction; 

(2) interpretative rules and statements of policy; or 

(3) as otherwise provided by the agency for good cause found and published with the 
rule. 

(e) Each agency shall give an interested person the right to petition for the issuance, 
amendment, or repeal of a rule. 



114 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

amendment, or repeal of a rule." Of course, the relevant agencies 
have the discretionary authority to give notice and allow partici- 
pation in the excepted situations, but they are under no obliga- 
tion to do so. 

B. Should the APA Be Modified To Cure This Problem? 

Question 3 of the special questionnaire sent to the relevant 
federal agencies as part of this study asked: 

In developing and promulgating rules for the implementation of each 
of these programs [with a substantial impact on the poor], does your 
department or agency follow the provisions of 5 U.S.C. 533(b)-533(e) 
[APA section 4, subsections (b)-(e)], even when the rulemaking pro- 
ceeding is excepted from these provisions by one of the exclusions in 5 
U.S.C. 533(a) [APA section 4(a)]? If you do not do so, please describe 
the procedures you do employ in rulemaking in each of these programs. 

The overwhelming majority of answers to this question indicated 
that the reporting agencies do not follow the notice and opportu- 
nity-to-participate procedures of subsections (b)-(e) when their 
rulemaking is excepted from them under section 4(a).^^ Only a 
very few agencies indicated a contrary practice, and even these 
confessed to inconsistency in this regard.*" In addition, rulemak- 
ing procedures actually utilized by the agencies in the excepted 
situations are inadequate substitutes for those found in subsec- 
tions (b)-(e) of APA section 4. Substitute procedures are not 
consistent and do not, in most cases, assure adequate notice to the 
poor or a sufficient opportunity for their participation. In some 
cases not governed by subsections (b)-(e), the agencies simply 
determine the rule they think appropriate and promulgate it 
without notifying or consulting with anyone outside the agency." 



'* The Department of Agriculture, for example, reported that "the Department does not 
follow the provisions of 5 U.S.C. 553(b)-553(e) in developing and promulgating rules for the 
programs listed above" ; the Department of Housing and Urban Development reported that 
"the provisions of 5 U.S.C. 553(b)-(e) are not followed for programs covered by the exemp- 
tion;" and the Veteran's Administration reported that "in developing and promulgating rules 
for the implementation of veteran's programs we do not generally follow the provisions of 5 
U.S.C. 553(b) -553(e), as our rulemaking procedures are excepted by the provisions of 5 U.S.C. 
553(a) (2)." 

*" For example, the Department of Labor reported that "in cases of rulemaking excepted 
from 5 U.S.C. 553 the Department of Labor does nevertheless follow the provisions of section 
533 when it deems it appropriate or desirable to do so." The Department of Transportation 
also reported that while it does follow § 553(b)-(e) [APA § 4, subsections (b)-(e)] for some 
programs exempted from § 553 (APA § 4), at the present time it does not do so for most such 
exempted programs. 

■** For example, the Small Business Administration reported that "under the exemption in 
5 U.S.C. § 553(a), rules for [the Local Development Company Loan Program and the Economic 
Opportunity Loan Program] are initially published and issued in the form adopted by the 
agency." The Department of Labor reported as to rulemaking exempted from § 553 (APA § 4) 
that it "frequently gives public notice of proposed rulemaking and invites public participation 
therein when the proposed rule is expected to have widespread effects and when for any other 



REC. 5. REPRESENTATION OF POOR 115 

In other cases, agencies give notice to, and engage in informal 
consultation with, whomever they happen to think appropriate 
under the circumstances.'^ 

Question 4 of the questionnaire asked the same federal agencies 
responding to the prior question the following : 

What disadvantages, if any, do you see in a statute which would elimi- 
nate the exclusions now in 5 U.S.C. 553(a) [APA section 4 (a)] as 
they may apply to . . . [your programs with a substantial ;"^Pact on 
the poor], and thereby would make the provisions of 5 U.S.C. 55J(D - 
553(e) [APA section 4, subsections (b)-(e)l applicable to all rulemak- 
ing relating to these programs? (Assume that the several exceptions 
now in sections 553(b) through (e) would remain unchanged.) 

Although a number of agencies saw no substantial disadvantages 
in eliminating the blanket exclusions of subsection (a) under 
the specific conditions indicated in the above question," most 
respondents thought it undesirable to eliminate any of these 
exclusions. The reasons advanced for maintaining the section 
4(a) exceptions to the requirements of subsections (b)-(e) 
varied: elimination of the exceptions is unnecessary;*^ it would 
make rulemaking too cumbersome and thereby deprive the agency 
of desirable and necessary flexibility in the adoption of its rules ; '■' 
it would cause needless and injurious delay in the final pro- 



reason it is considerd desirable to obtain the views and objections of those to whom the rules 
would apply, otherwise, the rules are evaluated by the bureau concerned, and are adopted and 
published in the Federal Register." .. ,_ . , .- „„j ;„„io 

« For example, the Tennessee Valley Authority reported that "the formulation and imple- 
mentation of TVA policies in carrying out its program of resource development use are ex- 
cluded from the rulemaking procedure of 5 U.S.C. § 553 by the provisions of «"^«-;-" <* • 
Such policies and the implementation thereof are determined by the TVA Board and -rerecord- 
ed for internal guidance in an administrative code. They "e b---«»;,t to the -"-tion of 
interested units of government, organizations, and institutions, through discussion ""^ "^f"^^; 
Won and appropriate press releases." The Department of Agriculture "[f P°"<*^^ ^^•'\'^,^^* 
to its food program that it does not follow § 553(b)-(e). ,»>"V;^^^V t'LrsoTnel oJ the 

proposed regulations and amendments thereto are discussed with dis rict l^J'°^^'\f '^^ 
Department and with representatives of the State agencies, in ^'-^''-\ ^I'^'^'^ZT Zlrs^s 
conferences or operating as task force groups." (Note that recipients of these food programs 
or their representatives were not among those listed as being consulted.) ,i„Hv«ntaees 

«The Department of Labor reported it "does not anticipate substantial d.sadvanUges 
to the programs listed in response to question 1 from the elimination of the -^'--^ "°^ '^^ 
5 U.S.C. 553(a)" and the Department of Transportation reported that we wou d "Ot object 
to elimination of the exemptions for loans and grants. The Department is in ^^''•^''^'"^^^ 
advantage of the exclusion in the case of Federal airport aid. and is considering following this 
course in the case of its other grant and loan programs. 

«For example, the Department of Health. Education, and Welfare replied that we h^e 
found that in the «rant-in-aid field, publication of notice of P^^f «' ■'"•^f '"^, '"/^; J^„ 
eral Register is not the most suitable way to focus the attention of interested persons, agencies 
and groups on the proposal." , , , 

"For example, the Tennessee Valley Authority responded that "application of the rule- 
making procedures of 5 U.S.C. § 553 to the TVA resource development program would de- 
cTease its flexibility and hinder its effectiveness." Similarly the Department of A."cu.ture 
reported that "it would be unnecessarily cumbersome to apply the procedures of the sUtute 
and might deprive the Department of a desirable flexibility in the adoption of rules. 



116 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

mulgation of rules for some programs ; ^^ it would cause a tremen- 
dous increase in agency work and operating costs ; ^^ it would be 
insufficient as a means to assure in all cases adequate participa- 
tion by the relevant people in rulemaking and, therefore, might 
sometimes needlessly require an agency to follow two sets of 
procedures in order to involve properly the right persons;*^ it 
might put the agency and those most directly affected by its 
policies in an adversary position, thereby discouraging mutual 
cooperation toward obtaining the best solutions to common prob- 
lems ; *^ and, it might conflict with some specific provision of the 
agency's enabling act.^'' 

In light of the injurious effect which these exemptions have on 
the ability of the poor to represent their interests in rulemaking, 
the above reasons for continuing them for programs substantially 
affecting the poor do not seem persuasive. It should be noted 
that elimination of the across-the-board exemptions in section 
4(a) would still leave section 4(b) (B) in force. This provision 
states that "when the agency for good cause finds (and incorpo- 
rates the finding and a brief statement of reasons therefor, in 
the rules issued) that notice and public procedures thereon are 
impracticable, unnecessary, or contrary to the public interest," 
it does not have to utilize such procedures in its rulemaking. 
Furthermore, if the policies expressed in subsections (b)-(e) 
are presently sound respecting unexcepted situations, they should 
be equally sound with respect to "public property, loans, grants, 
benefits and contracts." The reason for this is that the previously 



** The Department of the Interior stated, for example, that "we would not favor the elimina- 
tion of the exclusions in 5 U.S.C. 553(a) since to do so could produce injurious delays in the 
adoption of regulations." Similarly, the Small Business Administration replied that "it could 
complicate or delay rulemakinR," and the Department of Agriculture reported that the "F.H.A.'s 
operations would be seriously delayed and reduced in effectiveness if its rules were subjected 
to the mandatory notice and public procedure requirements." 

^' For example, the Veteran's Administration responded that elimination of the section 553(a) 
exclusions "would lead to heavier workloads within the agency and a resulting increase delay 
in awaiting benefits thereunder." In addition, although the Department of Labor saw no 
substantial drawbacks to repeal of the exemption in section 553(a) it did note that it "would 
of course, substantially increase the cost of Government." 

•" For example, the Office of Economic Opportunity responded that "the major disadvantage 
in a statute which would eliminate the exclusions now in 5 U.S.C. 553(a) is that it would 
require OEO to follow two sets of procedures, those of 5 U.S.C. 553, which would generally 
prove ineffective in reaching the poor, and those currently followed, particularly by CAP, which 
have proved effective and are constantly being made more effective." 

"•^ The Tennessee Valley Authority responded that "procedures for the formulation of policies 
under the rulemaking requirements of 5 U.S.C. § 553 would place TVA and its distributors 
in an advisory position where the tendency would be for each distributor or group of distribu- 
tors to try to gain advantage in the formulation of the policy rather than working with TVA 
and other distributors in a mutual effort to find the best possible solution to each problem 
as it arises." 

™ For example, the Department of Health, Education, and Welfare reported that with respect 
to some programs, "the authorizing statute provides for rulemaking procedures other than 
those provided by the APA . . . ." 



REC. 5. REPRESENTATION OF POOR 117 

noted objections to the application of subsections (b)-(e) to the 
classes now excepted by subsection (a) can also be leveled against 
the applicability of the former provisions to rulemaking not 
presently excepted by subsection (a). Consequently, there are no 
persuasive arguments which preclude repeal of all exemptions 
contained in section 4(a) as they may apply to programs with 
a substantial impact on, the poor. 

The exemptions contained in section 4(a) of the APA might, 
therefore, be amended to require federal agencies to follow the 
provisions of subsections (b)-(e) in all situations where their 
rulemaking has a substantial impact on the poor. A statutory 
change of this kind is somewhat broader than, but generally 
similar to, that contained in a recent bill introduced by Con- 
gressman Feighan of Ohio.''^ Congressman Feighan's bill would 
authorize the Attorney General of the United States to lift the 
exemption contained in section 4(a) whenever he deems that 
desirable to protect the interests of the poor. Once the Attorney 
General lifted the exemption as to a particular rulemaking situa- 
tion because the "interests of persons of limited means . . . make 
it appropriate," any "interested person," rich or poor, could 
presumably assert rights to participate under subsections (b)- 
(e). As noted earlier, agencies have unlimited discretion to 
permit public participation in situations excepted by section 
4(a), but they are not required to do so; the Feighan bill would 
only extend this same discretion to the Attorney General where 
he decides the interests of the poor require it. 

Some might argue that the Feighan bill, or a broader revision 
of section 4(a) expressly requiring federal agencies to follow the 
provisions of subsections (b)-(e) for all rulemaking having a 
substantial impact on the poor, raises serious fifth amendment 
due process questions of an equal protection nature. The argu- 
ment is that statutory revisions of this sort give the poor an 
unfair and irrational advantage over all other Americans. The 
proposed modifications would require federal agencies to provide 
notice and an opportunity to participate in normally exempted 
situations where the poor would be benefited by such rights ; but 
these modifications would not oblige agencies to provide these 
opportunities where they would only benefit the more affluent. 
However, this classification is rational because, unlike the poor, 
the American upper and middle classes have adequate alterna- 
tive means for protecting their interests in rulemaking. 

To protect their collective interests, the more affluent members 



"H.R. 17974, 90th Cong., 2d Sess. (1968) ; see note 24 supra. 



118 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

of our society do not need formal notice of proposed rules and 
an official opportunity to present their views to the appropriate 
authorities. After all, most official policy makers are middle-class 
persons who have had middle-class experiences and daily as- 
sociations. Consequently, those who are responsible for making 
administrative regulations are oriented toward the middle-class 
point of view and are generally conversant with the collective 
interests of that group. They are, therefore, likely to understand 
and protect the collective interests of the more affluent, even 
where such persons do not have a chance to represent their 
interests formally in rulemaking proceedings vitally affecting 
them. In order to equalize the poor's position in rulemaking with 
that of better financed segments of society, the poor may need 
special guarantees to assure full consideration of their views. 

Modification of the section 4(a) exemptions along the lines 
suggested above would assure that the poor and their representa- 
tives, including the people's counsel, would have a reliable means 
by which to discover and participate in proposed rulemaking of 
concern to them; they could simply watch the Federal Register. 
Such a change could probably be effected either by statute or by 
an executive order, since the President has the authority to 
command his subordinates to do that which they now have the 
discretion to do. Since a purely procedural requirement of this 
type would not seem to interfere with the substantive policy- 
making functions of the independent federal agencies, they may 
also be bound by such an order. 

However, there is a substantial evidence that section 4(a) 
needs a general legislative overhaul. Alteration or repeal of that 
provision has been proposed apart from any more specific con- 
sideration of its effect on the ability of poor people to represent 
their interests adequately in the rulemaking process.^^ Testimony 
adduced in the course of congressional hearings suggests the 
possible desirability of across-the-board revisions of the section 
4(a) exemptions. ^^ Consequently, it may be wise to leave the 
provision as it is pending further inquiry into the advisability 
of amending it generally. Instead of narrowly altering the pro- 
vision at this time in order to solve the particular problem under 
consideration, federal agencies should simply be urged, in strong 



^2 See, e.g., S. 163, 88th Cong., 2d Sess. § 4 (1964) (Comm. Revision) ; S. 518, 90th Cong., 
1st Sess. § 4 (1967). 

" Hearings on S. 1663 Before the Subcom. on Administrative Practice and Procedure of the 
Senate Comm. on the Judiciary, 88th Cong., 2d Sess. (1964) ; Hearings on S. 518 Before the 
Subcom. on Administrative Practice and Procedure of the Senate Comm. on the Judiciary, 
90th Cong., 1st Sess. (1967). 



REC. 5. REPRESENTATION OF POOR 119 

terms, to follow the provisions of subsections (b)-(e) for all 
rulemaking substantially affecting the poor. 

C. Special Notice and Hearing for the People's Counsel 

For the present purposes, another proposal can be made which 
would partly obviate the need to amend the current exemptions 
contained in section 4(a). All federal agencies contemplating the 
promulgation of rules substantially affecting the poor should be 
required to notify the people's counsel of the pendency of such 
rules and to give this advocate for the underprivileged an op- 
portunity to present the views of the poor. Imposition of this 
type of duty on a federal agency is not unprecedented. For 
example. Budget Bureau Circular A-85, discussed previously,"'' 
directs federal agencies to follow specific procedures with respect 
to the development of rules and policies for federal assistance 
programs that include among their eligible recipients state or 
local governments or quasi-public agencies. Unless special cir- 
cumstances preclude it, issuing agencies are required to provide 
the Advisory Comn\ission on Intergovernmental Relations (ACIR) 
with a copy of all proposed regulations — usually not less than 
forty-five days prior to their intended promulgation. The ACIR 
is then under a duty to transmit that information to various 
state and local government associations which have, normally, 
three weeks in which to comment to the agencies on the proposed 
regulations or policies. Another similar obligation to provide 
special notice and opportunity to appear is imposed by statute 
on the Interstate Commerce Commission : 

Before hearing or disposing of any complaint (filed by any person other 
than the Secretary) with respect to rates, charges, tariffs, and practices 
relating to the transportation of farm products, the [Interstate Com- 
merce] Commission shall cause the Secretary [of Agriculture] to be 
notified, and, upon application by the Secretary, shall permit the Secre- 
tary to appear and be heard." 

A similar requirement should now be adopted for all federal 
agencies with reference to their proposed promulgation of rules 
substantially affecting the economically underprivileged. If such 
a procedure were made mandatory, the present exceptions con- 
tained in section 4(a) would not seriously prejudice the ability 
of the poor to have their views represented in the formulation 
of rules substantially affecting them. When it received notice of 
such contemplated rulemaking, the people's counsel would dis- 



''* See page 91 supra. 

«7 U.S.C. § 1291(a) (1964). 



120 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

seminate that information to all interested poor people's orga- 
nizations. After obtaining feedback from them, the people's ; 
advocate would affirmatively represent the views of the econom- 
ically underprivileged to the relevant agency. The effective and 
economical operation of the people's counsel therefore makes it 
desirable to impose the following requirements on federal agen- 
cies: they must notify the poor's "official" group counsel of all 
proposed rulemaking substantially affecting poor persons and 
give it an opportunity to communicate to appropriate officials 
the views of the economically underprivileged with respect to 
those proposed rules. 

It is true, of course, that this limited requirement would not 
be as satisfactory a cure for the problem as an outright modifica- 
tion of section 4(a) in all cases where poor people's interests are 
concerned. A substitute provision of the kind suggested above 
would not assure notice of proposed rulemaking to anyone but 
the people's counsel and those informed by the people's counsel; 
and in such circumstances no one but the people's counsel would 
have a right to present formally the views of the poor with 
respect to those rules. However, pending general revision of 
section 4(a), this seems a desirable requirement and a minimally 
satisfactory substitute guarantee for present purposes. 

To ensure that the administrative process is not unreasonably 
burdened in some situations, an exception similar to that found 
in APA section 4(b) (B) should be engrafted onto the narrow 
requirement discussed above. Federal agencies should be allowed 
to promulgate rules substantially affecting the poor without giv- 
ing prior notice and an opportunity to be heard to the people's 
counsel "where the agency for good cause finds (and incorporates 
the finding and a brief statement of the reasons therefor in the 
rules issued) that notice and . . . [an opportunity for the people's 
counsel to present its views prior to promulgation of the rules] 
are impracticable, unnecessary or contrary to the public interest." 
In cases of this sort, agencies should be required to notify the 
people's counsel, as soon as practicable, of any consummated rule- 
making substantially affecting the poor. Moreover, they should 
also be required to provide it an opportunity to present the views 
of the poor with respect to the desirability of amending or re- 
scinding any such rules. This requirement will at least facilitate 
a reconsideration of accomplished rulemaking in light of the 
views of the poor where presentation of their position is im- 
practical prior to rulemaking. 

The specific requirements suggested here with respect to giving 
the people's counsel notice and an opportunity to be heard could 



REC. 5. REPRESENTATION OF POOR 121 

be imposed by statute or executive order. The latter method 
might be as efficacious as the former in binding independent 
regulatory agencies, since the order would deal only with a mat- 
ter of procedure and would not attempt to invade their sub- 
stantive policymaking functions. The ease with which such an 
order could impose or remove these requirements, or modify them 
as the need dictates, may also make it a more desirable tool for 
this purpose than a statute. 

VI. Conclusion 

Any attempt to cure the poor's lack of representation in federal 
rulemaking substantially affecting their interests requires a num- 
ber of remedies rather than a single one. Congress should insti- 
tute procedures to facilitate and encourage greater self-initiated 
efforts by relevant administrative agencies to ascertain the views 
of the poor. Some body must also perform the functions of a 
clearinghouse coordinator in order to facilitate greater 
affirmative participation by the poor and their organizational 
representatives in rulemaking. To ensure consistent, affirmative 
representation of high quality for the collective interests of the 
poor. Congress should create a people's counsel with the responsi- 
bilities described above. To perform its function properly, the 
people's counsel must receive notice of contemplated rulemaking 
affecting the poor, and must have an opportunity to present poor 
people's views on the proposed rules to the relevant agencies. 

All of these measures in combination should — if properly ex- 
ecuted in light of their purposes — provide an adequate remedy 
for the problem at hand. These recommendations are desirable 
because they will improve the administration of government. 
They will assure that the administrative decision makers in the 
federal establishment are better informed about the interests of 
the poor than at present. These proposals should also eliminate 
one source of unnecessary tension between the poor and the 
federal establishment. They will provide procedures whereby the 
poor can get a fair hearing on the formulation of significant 
public policies affecting them. The specific proposals made here 
will not create any substantial negative impact on the rulemak- 
ing process. They will make important affirmative contributions 
to that process. Since the lack of representation for the poor in 
federal rulemaking is a critical problem, these proposals should 
be implemented as swiftly as possible. 



RECOMMENDATION NO. 6 

DELEGATION OF FINAL DECISIONAL AUTHORITY 
SUBJECT TO DISCRETIONARY REVIEW BY THE AGENCY 



RECOMMENDATION 



1. In order to make more efficient use of the time and energies 
of agency members and their staffs, to improve the quality of 
decision without sacrificing procedural fairness, and to help 
eliminate delay in the administrative process, every agency hav- 
ing a substantial caseload of formal adjudications should con- 
sider the establishment of one or more intermediate appellate 
boards or the adoption of procedures for according administra- 
tive finality to presiding officers' decisions, v^^ith discretionary 
authority in the agency to affirm summarily or to review, in 
whole or in part, the decisions of such boards or officers. 

2. Section 8 of the Administrative Procedure Act, 5 U.S.C. 
557, should be amended as necessary to clarify the authority of 
agencies to restructure their decisional processes along either 
of the following lines : 

(a) Intermediate appellate boards 

(1) Whenever an agency deems it appropriate for the efficient 
and orderly conduct of its business, it may, by rule or order: 

(a) Establish one or more intermediate appellate boards 
consisting of agency employees qualified by training, ex- 
perience, and competence to perform review functions, 

(b) Authorize these boards to perform functions in con- 
nection with the disposition of cases of the same character 
as those which may be performed by the agency, 

(c) Prescribe procedures for review of subordinate de- 
cisions by such boards or by the agency, and 

(d) Restrict the scope of inquiry by such boards and by 
the agency in any review, without impairing the authority 
of the agency in any case to. decide on its own motion any 
question of procedure, fact, law, policy, or discretion as fully 
as if it were making the initial decision. 

(2) Any order or decision of an intermediate appellate board, 
unless reviewed by the agency, shall have the same force and 
effect and shall be made, evidenced, and enforced in the same 
manner as orders and decisions of the agency. 

(3) A party aggrieved by an order of such board may file an 
application for review by the agency within such time and in 

122 



REC. 6. DELEGATION OF DECISION MAKING 123 

such manner as the agency shall prescribe, and every such ap- 
plication shall be passed upon by the agency. 

(4) In passing upon such applications for review, an agency 
may grant, in whole or in part, or deny the application without 
specifying any reasons therefor. No such application shall rely 
upon questions of fact or law upon which the intermediate ap- 
pellate board has been afforded no opportunity to pass. 

(5) An agency, on its own initiative, may review in whole or 
in part, at such time and in such manner as it shall determine, 
any order, decision, report, or other action made or taken by an 
intermediate appellate board. 

(6) If an agency grants an application for review or under- 
takes review on its own motion, it may affirm, modify, reverse, 
or set aside the order, decision, report or other action of the 
intermediate appellate board, or may remand the proceeding for 
reconsideration. 

(7) The filing of an application for agency review shall be a 
condition precedent to judicial review of any order of an inter- 
mediate appellate board. 

(8) Agency employees performing review functions shall not 
be responsible to or subject to the supervision or direction of any 
employee or agent engaged in the performance of investigative 
or prosecuting functions for any agency. 

( b ) Discretionary review of decisions of presiding officers 

(1) When a party to a proceeding seeks administrative review 
of an initial decision rendered by the presiding officer (or other 
officer authorized by law to make such decision), the agency 
may accord administrative finality to the initial decision by 
denying the petition for its review, or by summarily affirming 
the initial decision, unless the party seeking review makes a 
reasonable showing that : 

(a) A prejudicial procedural error was committed in the 
conduct of the proceeding, or 

(b) The initial decision embodies (i) a finding or con- 
clusion of material fact which is erroneous or clearly errone- 
ous, as the agency may by rule provide; (ii) a legal con- 
clusion which is erroneous; or (iii) an exercise of discretion 
or decision of law or policy which is important and which 
the agency should review. 

(2) The agency's decision to accord or not to accord adminis- 
trative finality to an initial decision shall not be subject to judicial 
review. If the initial decision becomes the decision of the agency, 
however, because it is summarily affirmed by the agency or 



124 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

because the petition for its review is denied, such decision of 
the agency will be subject to judicial review in accordance withi; 
established law. 



REPORT OF THE COMMITTEE ON AGENCY ORGANIZA- 
TION AND PROCEDURE IN SUPPORT OF INTERMEDI- 
ATE APPELLATE BOARDS: SUBPARAGRAPH 1(a) OF 
RECOMMENDATION NO. 6 



Prepared by 

James O. Freedman 

Professor of Law 

University of Pennsylvania 



Recent criticism of the federal administrative agencies has 
called attention to two fundamental problems that threaten and 
often compromise the effectiveness of the administrative process : 
delay in the disposition of contested proceedings and failure to 
achieve coherent policy formulation. There are differences of 
opinion as to the causes of these problems and differences in 
estimate about what measures would be most likely to solve them. 
But there is widespread agreement that the problems exist. 

The late James M. Landis, in his Report on Regtilatory 
Agencies to the President-Elect, submitted to John F. Kennedy 
in December, 1960, put the first problem directly: "Inordinate 
delay characterizes the disposition of adjudicatory proceedings 
before substantially all of our regulatory agencies." ^ The sta- 
tistics he reported from the larger regulatory agencies demon- 
strated that long periods of time were required by most to bring 
formal proceedings to a conclusion.- Several agencies required 
as long as three years to dispose of a proceeding. Other agencies 
had such large backlogs of pending cases that their present staffs 
could not hope to clear them up in less than a decade, even 
assuming that no new cases were docketed in the interim. The 
available statistics, Dean Landis concluded, "all corroborate the 
fact of interminable delay." => There is some evidence that delay 



* J. M. Landis, Report on Regulatory Agenctejs to the President-Elect 5 (submitted by 
the Chairman of the Subcommittee on Administrative Practice and Procedure to the Senate 
Committee on the Judiciary), 86th Cong., 2d Sess. (Comm. Print 1960) [hereinafter cited 
as Landis Report]. 

^ Landis Report 5-6. 

' Landis Report 6. On the problem of delay, see also Goldman, Administrative Delay amd 
Judicial Relief, 66 Mich. L. Rev. 1423 (1968) Freedman, The Uses and Limits of Remand in 
Administrative Law: Staleness of the Record, 115 U. Pa. L. Rev. 145 (1966) ; Gellhorn, Ad- 

125 



126 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

in the administrative process, at least in some agencies, has 
become v^^orse since Dean Landis wrote.* 

Related to the problem of delay is the fact that the cost of 
pursuing administrative remedies has become steeper. Delay often 
means increased costs in litigating a protracted proceeding at 
the administrative level and increased indirect costs while await- 
ing the ultimate administrative determination. The rise in costs 
has been particularly acute in cases involving petitions for im- 
portant certificates or licenses from regulatory agencies. "The 
result," as Dean Landis said, "is that in many situations the 
small businessman is practically excluded from an opportunity 
to compete." '^ 

The second problem— the failure of the federal administrative 
agencies to achieve the formulation of coherent policy — has been 
given its fullest statement by Judge Friendly.^ The problem, in 
his words, "is the failure to develop standards sufficiently defi- 
nite to permit decisions to be fairly predictable and the reasons 
for them to be understood." ' Although most statutes command 
the agencies they create to develop broad policies in the areas 
subject to their jurisdiction, such policy formulation as has re- 
sulted has widely been regarded as inadequate.^ Newton Minow, 
writing to the President upon completion of his service as Chair- 
man of the Federal Communications Commission, noted that 
although "[p]olicy making is the critical responsibility of the 
agency ... it is precisely in this area that the agencies have 
been markedly deficient." « Dean Landis came to similarly criti- 

miniatrative Procedure Reform: Hardy Perennial. 48 A.B.A.J. 243 (1962) ; Note Judicial 
Acceleration of the Administrative Process: The Right to Relief From Unduly Protracted Pro- 
ceedings, 72 Yale L.J. 574 (1963). 

* See Staff of the Senate Comm. on the Judioary. 89th Cong., 2d Sess., Evaluation 
t^HARTS ON Delay in Administrative Proceedings (Comm. Print 1966) ; Statement of Frank 
W. McCulloch, Chairman of the National Labor Relations Board, in Hearings on Review of the 
National Labor Relations Act Before the Special Subcommittee on Labor of the House Comm 
on Education and Labor. 89th Cong., 2d Sess. 31, 32-34 (1966). Cf. PiUsbury Co. v. FTC, 354 
F.2d 952 (5th Cir.), complaint dismissed on remand. Trade Gas. H 17,484, at 22,759 (1966). 

= Landis Report 10. He goes on to note that many companies, able to pass such costs on to 
consumers in the form of rate increases, lack any real incentive to press for administrative 
reform. Id. 

» H. Friendly, The Federal Administrative Agenhes : The need for Better Definition of 
Standards (1962). 

' Id. at 5-6. 

«See N. MiNovv. Equal Time: The Private Broadcasters and the Public Interest 277-304 
(1964) ; Hector, Problems of the CAB and the Independent Regulatory Commissions, 69 Yale 
L.J. 931 (I960) ; Long, Proposed Changes in Administrative Law, 19 Svv'. L.J. 203 (1965) ; 
Long, The Proposed New Administrative Procedure Act. 55 Geo. L.J. 761 (1967); Loevinger' 
Book Review, 68, Colum. L. Rev. 371, 374-79 (1968). 

"> Suggestions for Improvement of the Administrative Process: Letter to President Kennedy 
from Newton N. Minow, Chairman, Federal Communications Commission, 15 Ad. L. Rev. 146, 147 
(1963) (emphasis in original) [hereinafter cited as Minow Letter^. For comments in the 
specific context of the FGC, see Farragut Television Corp., 8 F.G.G. 2d 279, 285-86 (1967) 
(statement of Commissioner Johnson) ; Schwartz, Comparative Television and the Chancellor's 



REC. 6. DELEGATION OF DECISION MAKING 127 

cal conclusions.^" 

The causes of these problems are complex and varied, differing 
from agency to agency. Typically, however, delay in the disposi- 
tion of adjudicatory proceeding is related at least to the grow- 
ing, insistent press of business before regulatory agencies, lack 
of adequate agency budgets and staff," and the substantive and 
procedural complexity of proceedings — especially comparative 
hearings — involving multiple parties and issues. Lack of adequate 
policy formulation is typically related at least to "the inability 
of the members of multimember commissions to reconcile differ- 
ences among themselves and the press of adjudicatory business 
demanding fairly prompt solution." ^- When there are frequent 
changes in an agency's membership, this problem is aggravated." 
Dean Landis described two additional factors stemming from the 
burdensome demands made upon members of most administra- 
tive agencies: the fact that "in adjudicatory matters, the drafting 
of opinions is delegated [by the members of the agency] to 
opinion writing sections or assistants so that the rationalization 
upon which a purportedly informed decision rests is not truly 
their own";'" and the fact that "briefs of counsel, findings of 
hearing examiners, relevant portions of the basic records, are 
rarely read by the individuals theoretically responsible for the 
ultimate decision." ' ' One result, as Chairman Minow stated, "is 
to not formulate the policy — and to postpone the policy decision 
to resolution on a case-by-case basis which all too often means 
inconsistent decisions with the public and the regulated industry 
not knowing the ground rules. More important, its consequence 
is that vital planning and policy measures are not undertaken." ^® 

It would be simplisitic to suggest any single proposal as a 
certain corrective for problems that have often seemed intract- 



Foot. 47 Geo. L.J. 655 (1959) ; JaflFe, The Scandal in TV Licensing. Harpers Magazine, Sept. 
1957, at 77. 

10 Landis Report 22-24. 

'* See Landis Report 6-7. 

" Note, Intermediate Appellate Revieiv Boards for Administrative Agencies, 81 Harv. L. Rev. 
1325.1326 (1968) (footnote omitted) . 

" See Welborn, Presidents, Regulatory Commissioners, and Regulatory Policy, 15 J. Pub. Law 
3 (1966). 

" Landis Report 19-20. See also Great Lakes Airlines, Inc. v. CAB, 291 F.2d 354, 370 (9th 
Cir.), cert, denied, 368 U.S. 890 (1961). Hector, Government by Anonymity: Who Writes Our 
Regulatory Opinions?, 45 A. B.A.J. 1260 (1959) ; Westwood, The Davis Treatise: Meaning to 
the Practitioner, 43 Minn. L. Rev. 607, 615-18 (1959). 

'' Landis Report 20. Some scholars have cited the failure of (Jontcress to assure agencies a 
mandate to resolve policy issues as another factor related to inadequate policy formulation. 
See L. Jaffe, Judictal Control of Administratin-e Action 50 (1965). 

^' Minoiv Letter 147 (emphasis in original). See also M. Bernstein, Regulating Business 
BY Independent Ck)MMissioN 176-79 (1955). 



128 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

able.^^ But it would be imprudent to ignore procedures that some 
agencies have found workable and effective in ameliorating these 
problems. One such procedure is the intermediate appellate Re- 
view Board, ^® The Federal Communications Commission and the 
Interstate Commerce Commission, pursuant to specific statutory 
authorization, have created Review Boards to hear appeals from 
decisions of hearing examiners in adjudicatory cases. This article 
centers upon the experience of the FCC Review Board. ^^ The 
experience suggests that Review Boards have the capacity for 
assisting administrative agencies in meeting some of the problems 
outlined above. 

The FCC Review Board 

Structure 

In 1961, Congress amended section 5(d) of the Federal Com- 
munications Act to authorize the Federal Communications Com- 
mission to create an intermediate appellate Review Board : 

(1) When necessary to the proper functioning of the Commission and 
the prompt and orderly conduct of its business, the Commission may, by 
published rule or by order, delegate any of its functions [with certain 
listed exceptions] to a panel of commissioners, an individual commis- 
sioner, an employee board, or an individual employee, including func- 
tions with respect to hearing, determining, ordering, certifying, report- 
ing, or otherwise acting as to any work, business, or matter; except that 
in delegating review functions to employees in cases of adjudication (as 
defined in the Administrative Procedure Act) , the delegation in any such 



"See, e.g., W. Gary, Poutics and the Regulatory AcENaES 125-39 (1967); L. Jaffe, 
Judicial Control of Administrative Action 11-27, 49-51 (1965) ; Jaflfe, The Effective Limits 
of the Administrative Process: A Reevaluation, 67 Harv. L. Rev. 1105 (1954). 

*' The use of such boards was recommended by Dean Landis to President- Elect Kennedy. 
Landis Report 85 (Recommendation No. 5). 

«The ICC Review Board was created pursuant to 75 Stat. 517 (1961), 49 U.S.C. § 17 (1964). 
Its work is discussed in Note, Intermediate Appellate Revietv Boards for Administrative Agen- 
cies, 81 Harv. L. Rev. 1325, 1329-30 (1968). See also ABA Committee on Agency Adjudication, 
Progress and Problems in Agency Adjudications, 14 Ad L. Rev. 239, 245-48 (1962) ; Auerbach, 
Scope of Authority of Federal Administrative Agencies to Delegate Decision Making Authority 
to Hearing Examiners, 48 Minn. L. Rev. 823, 845-48 (1964) ; Hutchinson, Improving Commis- 
sion Organization and Procedure — Some Neiv Developments, 32 ICC Prac. J. 134 (1964) ; 
Kahn, Reorganization of the I.C.C. — 1961, 29 ICC Prac. J. 586 (1962) ; Authority Delegated to 
Finance Review Board by I.C.C, 29 ICC Prac. J. 608 (1962). 

Three other agencies, the Civil Aeronautics Board, the Federal Trade Commission, and the 
Federal Maritime Commission, have the authority, pursuant to Reorganization Plans, to dele- 
gate review functions to an employee board. Reorganization Plan No. 3 of 1961, 75 Stat. 837 
(1961). 49 U.S.C. § 1324 (1964) [CAB]; Reorganization Plan No. 4 of 1961, 75 Stat 837 
(1961), 15 U.S.C. § 41 (1964) [FTC]; Reorganization Plan No. 7 of 1961, 75 Stat. 840, 46 
U.S.C. § 1111 (1964) [FMC]. None has exercised the authority, although the CAB has created 
a system of discretionary review procedures. See text accompanying notes 94-96 infra. For a 
suggestion of the reasons for the failure of the FTC and FMC to act, see Auerbach, Scope of 
Authority of Federal Administrative Agencies to Delegate Decision Making to Hearing Examin- 
ers, 48 Minn. L. Rev. 823, 833-34 (1964). See also Note, The Progress of Federal Agency Re- 
organization Under the Kennedy Administration, 48 Va. L. Rev. 300 (1962). 



REC. 6. DELEGATION OF DECISION MAKING 129 

case may be made only to an employee board consisting: of three or more 
employees referred to in paragraph (8) of this subsection. Any such rule 
or order may be adopted, amended, or rescinded only by a vote of a ma- 
jority of the members of the Commission then holding office."" 

Prior to this amendment, the Commission had been required by- 
law to review all initial decisions of hearing examiners to which 
exceptions had been filed, and to hear oral argument upon request. 
This was obviously a time-consuming responsibility. The amend- 
ment granted the Commission discretion to adopt intermediate 
appellate review procedures if it believed they might help expedite 
the disposition of adjudicatory cases; these procedures were in- 
tended to enable members of the Commission to devote more of 
their time to policy and planning and to the more significant 
adjudicatory cases, primarily those involving issues of general 
communications policy importance.-' The Commission took advan- 
tage of the amendment and in June, 1962, adopted detailed regula- 
tions establishing a Review Board.-' Four senior staff employees 
were appointed to the Board; in 1964 its membership was in- 
creased to five, its present strength. 

The Review Board began functioning on August 1, 1962. Under 
regulations issued by the Commission, it is authorized to act in 
three general areas. (1) The Review Board hears appeals from 
initial decisions of hearing examiners in all adjudicatory pro- 
ceedings (including mixed adjudicative and rule-making proceed- 
ings), except for those proceedings involving the renewal or 
revocation of a station license in broadcast and Common Carrier 
Radio Services;"' although section 5(d) would not prevent the 
Commission from granting the Review Board jurisdiction over 
such cases, the Commission apparently gave Congress informal 
assurances at the time the amendment was enacted that review 
of initial decisions in so-called "death sentence" cases would 
remain directly in the Commission.^* (2) The Review Board passes 
upon interlocutory appeals from rulings of hearing examiners; 
these include evidentiary rulings and rulings upon petitions for 
allowance of amendments to applications, petitions for extensions 



^47 U.S.C. § 155(d) (1) (1964). 

"H.R. Rep. No. 723, 87th Cong., 1st Sess. 1 (1961) ; S. Rep. No. 576. 87th Cong.. 1st Sess. 
5 (1961). See Nathanson, Looking Backward 2000-1963: A Personal View of the Administrative 
Conference, 1961-62, 16 Ad. L. Rev. 33 (1963). 

"47 C.F.R. §§ 0.361-0.365: 1.101-1.117 (1968). 

"47 C.F.R. § 0.365(a) (1968). 

''' The creation of this exception to the Review Board's jurisdiction cannot be justified on 
principle. The task of review in these cases is not distinguishable from that involved in cases 
presently entrusted to the Review Board. The "life-or-death" interests concerned would better 
be served not by removing these cases from the jurisdiction of the Review Board, but rather 
by providing for their mandatory review by the Commission after Review Board consideration. 



130 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

of time, and Detitions to reopen the record.^^ (3) The Review Board 
exercises original jurisdiction over two classes of interlocutory 
matters: petitions to amend, modify, enlarge, or delete issues 
upon which the case was designated for hearing by the Com- 
mission,'6 and joint requests filed by broadcast applicants for the 
approval of agreements looking toward the removal of a conflict 
between their applications." 

Although the Review Board, in reviewing initial decisions of 
hearing examiners, is "authorized to perform all of the review 
functions which would otherwise have been performed by the 
Commission," ^s it does not have responsibility for the formulation 
of general communications policy. It is required to decide all 
matters coming before it on the basis of precedent and existing 
policy.29 The Commission has reserved to itself the authority, in 
cases raising novel or important issues of law or policy, to review 
initial decisions directly.^" 

Any person aggrieved by a decision of the Review Board 
may file an application for review with the Commission.^*^ The 
Commission's regulations require that an application for review 
specify with particularity, from among the following, the fac- 
tor (s) which warrant Commission consideration of the questions 
presented: 

(i) The action taken pursuant to delegated authority is in 
conflict with statute, regulation, case precedent, or estab- 
lished Commission policy. 

(ii) The action involves a question of law or policy which 
has not previously been resolved by the Commission. 

(iii) The action involves application of a precedent or 
policy which should be overturned or revised. 

(iv) An erroneous finding as to an important or material 
question of fact. 

(v) Prejudicial procedural error.^- 
The Commission may grant the application for review in whole 

"47 C.F.R. § 0.365(c) (1968). 

^^ See Fidelity Radio, Inc., 1 F.C.C. 2d 661 (1965) ; Atlantic Broadcasting Co., 5 F.C.C. 2d 
717 (1966). 

"47 C.F.R. § 0.365(b) (1968) ; see "What the Bible Says," Inc., 12 F.C.C. 2d 610 (1968) ; 
Bay Broadcasting Co., 10 F.C.C. 2d 331 (1967) : Tinker, Inc., F.C.C. 2d 372 (1966). 

2M7 C.F.R. § 0.361(d) (1968). 

29 47 C.F.R. § 0.361(d) (1968). See also FCC, Review Board Progress Report, April 1965, 
at 2. 

3" 47 C.F.R. § 0.361 (a) and (b) (1968). Two recent cases in which the Commission exercised 
this authority are Midwest Television, Inc., 13 F.C.C. 2d 478 (1968) (expansion of CATV 
service into areas served by regular broadcasting), and Use of the Carterfone Device in Mes- 
sage Toll Telephone Service, 13 F.C.C. 2d 420 (1968) (propriety of telephone company tariff 
prohibitions against interconnections of customer-provided devices). 

"47 U.S.C. § 155(d)(4) (1964) ; 47 C.F.R. § 1.115(a) (1968). 

=2 47 C.F.R. § 1.115(b)(2) (1968). 



REC. 6. DELEGATION OF DECISION MAKING 131 

or in part, or may deny the application, without specifying rea- 
sons for the action taken.^^ If the Commission denies the applica- 
tion, the decision of the Review Board becomes the decision of the 
Commission,'" which, if it is in other respects a final order, may 
then be made subject to judicial review.''' 

Performance 

The Commission is plainly impressed with the utility of the 
Review Board. In a progress report prepared in April, 1965, the 
Commission appraised the Review Board's performance during 
the first twenty-nine months of its existence and concluded that 
it "has well served the purposes for which it was established, and 
substantial benefits to the Commission and to parties to Commis- 
sion proceedings have accrued from its operations." ^^ This judg- 
ment has more recently been affirmed by several members of the 
Commission," 

The Commission believes that two substantial benefits have 
resulted from the creation of the Review Board: improvement 
of the hearing process and saving of agency members' time.'^ 
They are worth considering separately. 

First, establishment of the Board has benefited the hearing processes. The 
members of the Board have been able to devote greater personal atten- 
tion to cases, and to dispose of them more expeditiously than would have 
been possible for the Commission virith its many other responsibilities. 
The Board has handled a large number of difficult matters with great 
competence, as indicated by the small number of appeals from its 
decisions and by the small number of decisions reversed, revised, or 
remanded by the Commission. Applications for review of Board actions 
have been handled expeditiously, and no difficulty has been experienced by 
the Commission in maintaining control over matters of policy." 

This statement, of course, groups several factors. First, the 
Review Board has been able to devote far more time and attention 
to the reviewing function than members of the Commission had 
been able to do in the past or could do now. Because of the 
limited definition of their function, members of the Review Board, 



"47 U.S.C. § 155(d)(5) (1964) ; 47 C.F.R. § 1.115(g) (1968). 

="^47 U.S.C. § 155(d)(3) (1964). 

"47 U.S.C. § 155(d)(7) (1964). . 

TOG, Remew Board Procress Report, April 1965, at 5. See also Comments of the FCC in 
Hearings on S. 1160, S. 1336. S. 1758 and S. 1879 Before the Subcomm. on Administrative 
Practice and Procedure of the Senate Comm. on the Judiciary, 89th Cong., 1st Sess. 454 (1965). 

"Comments of Chairman E. William Henry and Commissioners James J. Wadsworth and 
Kenneth A. Cox. in Staff of the Subcomm. on Administrative Practice and Procedure of 
THE Senate Comm. on the Judioary, 89th Cong., 2d Sess., Questionnaire Survey on Delay 
IN Administrative Proceedings 35-40 (Comm. Print 1966). 

'* FCC, Review Board Progress Report, April 1965, at 5-6. 

"47 U.S.C. § 155(d)(5) (1964) : 47 C.F.R. § 1.115(g) (1968). 



132 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

as the Commission soundly concluded, "can participate much more 
actively and extensively in discharging their review functions 
than can members of the Commission." *" The consequence is that 
the members of the Review Board are prepared for the oral 
argument in every case; they have read the pleadings and the 
briefs and are informed as to the facts and issues involved. Oral 
argument thus becomes a meaningful dialogue between advocate 
and decision-maker ; in this respect the Board's practice resembles 
that of a conscientious appellate court. It is understandable that 
lawyers regard oral argument before the Review Board as more 
valuable than it is before the Commission. 

Second, the Review Board's decisions " have been of high qual- 
ity. This quality is the result in part of the fact that responsi- 
bility for the preparation of every opinion is assigned to an 
individual member of the Board, under whose name the opinion 
will appear."-' Occasionally the Review Board member responsible 
for the preparation of an opinion will draft it himself; more 
frequently, he will supervise the preparation of a draft opinion 
by a member of the Review Board's staff. Drafts are then 
circujated among the other members of the Review Board. The 
Commission has observed, "The desirable merger of the opinion- 
writing and decision-making processes is feasible in this degree 
because members of the Board, with their responsibilities limited 
to adjudicatory hearing cases, can devote themselves for appre- 
ciable periods to the preparation of individual opinions." "^ 

Although the opinion-writing process retains some characteris- 
tics of the "institutional decision," " the members of the Review 
Board participate more intensively and effectively in the prep- 
aration of the written decision than do the members of most 
agencies. One result is that decisions of the Review Board typi- 
cally meet rather than avoid complex issues and support their 
conclusions with reasoning and relevant authority-^^ Changes of 
position are not "slipped into an opinion in such a way that only 
careful readers would ever know what had happened, without 
articulation of reasons, and with the prior authorities not over- 



*> FCC, Review Board Progress Report, April 1965, at 5. 

*^ The decisions of the Review Board are published in the Federal Communications Commis- 
sion Reports. 
^ FCC, Review Board Progress Report, April 1965, at 5. 

^* See 2 K. Davis, Administrative Law Treatise, eh. 11 (1958). 

^^ See, e.g.. Northeast Broadcasting, Inc. v. FCC, 400 F.2d 749, 758 (D.C. Cir. 1968) ("The 
Review Board's Decision was detailed, comprehensive and expansive in its discussion of the 
evidence and the relative weight it attached thereto, and concise and precise as to its ruling 
and the reasons therefor.") 



REC. 6. DELEGATION OF DECISION MAKING 133 

ruled," ""' as Judge Friendly complained of a series of FCC opin- 
ions. Among lawyers who regularly appear before the Commis- 
sion, there seems to be general agreement that decisions of the 
Review Board are more predictable than were decisions of the 
Commission in similar matters before establishment of the Board. 
They reach results that are significantly more consistent with 
precedent and existing policy and that adhere more closely to 
the record facts. 

These achievements stem in part from the limits on the Review 
Board's power. The Board lacks the authority to enter new policy 
areas. This means that it has no occasion to discuss policy prob- 
lems with industry representatives. The resulting isolation and 
anonymity is a salutary protection against hints or charges of 
improper influence. The Board also lacks the authority to give 
play or weight to its own expertise in assessing, for example, the 
comparative qualifications of competing applicants for a broad- 
cast license. This means, as one lawyer has said, that the Review 
Board will almost always hold for the applicant whose case is 
best supported in the record in light of the factors that prior 
Commission decisions have made relevant ; conversely, the Review 
Board is quite unlikely to rely upon the extra-record intimations 
that lawyers are accustomed to see play a dispositive role at 
the Commission level. 

It should be said, however, that decisions of the Review Board 
reflect some of the defects of their virtues. Review Board deci- 
sions sometimes tend to be scholastic in their reliance upon 
precedent, formalistic in their insistence upon compliance with 
procedural and evidentiary rules, and colorless in their treatment 
of policy issues."' Given the Review Board's precise mandate and 
its position in the Commission's decisional structure, it would 
be surprising if such tendencies did not appear. 

One measure of the Commission's high regard for the quality 
of Review Board decisions may be seen in its reviewing practices. 
The Commission has not often granted petitions to review deci- 
sions of the Review Board and has even less frequently reversed 
or remanded Review Board decisions. 

During the period from August 1, 1962, to December 31, 1967, 
the Review Board decided 175 appeals from initial decisions. 
Petitions for review were filed with the Commission in 86 cases. 
The Commission agreed to review only 13 percent of the Review 



«H. Friendly, The Federal Administrati\-e AcENaEs: The Need for Better Definition 
OF Standards 63 (1962). 

" Cf. Fitzgerald, Trends in Federal Administrative Procedure. 19 Sw. L.J. 239, 264 (1965) ; 
Atlantic Broadcasting Co., 5 F.C.C. 2d 717, 718 (1966). 



134 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

Board's decisions: it granted 23 petitions, denied 61, and did not 
pass on 2 that were withdrawn. Broken down by year, the figures 
more graphically indicate how infrequently the Commission has 
agreed to hear appeals from Review Board decisions. During fiscal 
1963, the Commission granted no petitions for review; during 
fiscal 1964, it granted 2 petitions; during fiscal 1965, it granted 
6 petitions; during fiscal 1966, it granted 9 petitions; during 
fiscal 1967, it granted 4 petitions; and during the first half of 
fiscal 1968, it granted 2 petitions. Of the 23 cases that the Com- 
mission agreed to hear during this period, the decision of the 
Review Board was affirmed in 9 cases, reversed in 9 cases, and 
remanded in 4 cases; one case had not been decided by the end 
of the period. ^^ 

The Commission's use of the power of review has thus been 
sparing, particularly since review is to be expected in a certain 
number of cases that are of general communications importance, 
raise new issues of policy, or make a persuasive claim for chang- 
ing an existing statement of policy.*'' Sparing use by the Com- 
mission of the power of review is crucial to the Review Board's 
prestige and effectiveness. The capacity of a Review Board to 
reduce the average length of time that an agency requires to 
dispose of proceedings depends in part, as the next few para- 
graphs suggest, upon how frequently the members of the agency 
elect to review decisions of the Review Board. And this depends 
in largest part — the argument has come full circle — upon the 
quality of Review Board decisions. 

In the Commission's language, the Review Board has been 
able "to dispose of [cases] more expeditiously, than would have 
been possible for the Commission with its many other responsi- 
bilities." s" Statistical tables supplied by the Commission appear 
to support this contention." During fiscal 1961, before the Review 
Board had been created, the Commission required an average 
time of 262 days from the date on which the initial decision was 
issued to dispose of an appeal from an initial decision of a hearing 
examiner. By comparison, the Review Board, during the first 29 
months of its existence, required an average time of 172 days to 
dispose of the same appeal — an average saving of almost three 
months per proceeding. The statistics with respect to interlocu- 



■** These statistics and the ones that follow are based upon information supplied by Donald J. 
Berkemeyer, Chairman of the Review Board. Statistics may also be found in FCC, Review 
Board Progress Report, April 1965. 

'"' Some such cases, of course, will be reviewed directly by the Commission. See note 30 
supra and accompanying text. 

*" FCC, Review Board Progress Report, April 1965, at 5. 

" Id., Tables No. 1, 2, and 3. The figures that follow are rounded to the nearest day. 



REC. (5. DELEGATION OF DECISION MAKING 135 

tory actions are of similar proportions. During fiscal 1961, the 
Commission required an average time of 66 days to dispose of an 
interlocutory matter. The Review Board, during its first 29 
months, required an average time of 36 days, thus saving about 
one month per case. 

The statistics with respect to the Review Board's experience 
for the years subsequent to 1964 are of a similar order. During 
fiscal 1965, the average length of time required to dispose of an 
appeal from an initial decision was 228 days; during fiscal 1966, 
it was 267 days; during fiscal 1967, it was 244 days; and during 
fiscal 1968, it was 210 days. The statistics for these years with 
respect to the disposition of interlocutory matters indicate aver- 
age time periods of 40 days per case during fiscal 1965; 43 days 
during fiscal 1966; 38 days during fiscal 1967; and 43 days 
during the first half of fiscal 1968. 

As these statistics reveal, the average time the Review Board 
has required to dispose of matters before it has fluctuated in 
recent years. These fluctuations have coincided with an enlarge- 
ment of the jurisdiction of the Review Board and a want of 
sufl^cient staff assistance. 

It is important to note that the statistics do not take account 
of the time consumed when a party petitions the Commission to 
review the decision of the Review Board. If such a petition is 
filed," the saving in days is reduced by the time required by the 
Commission to act on the application. If the Commission denies 
the petition, time may be saved over the average pre-Review 
Board experience, not least because the Federal Communications 
Act allows the Commission to deny such petitions "without speci- 
fying any reasons therefor." ■■' However, if the Commission grants 
the petition and reviews the decision of the Review Board on 
the merits, the total amount of time required for action by the 
Review Board and the Commission will almost certainly be 
greater than the time that would have been required if the initial 
decision had been reviewed directly by the Commission."^* 

In 1966, Chariman E. William Henry said that the Review 
Board "has been able to decide such cases [of adjudication] more 
expeditiously than was previously the case when a Commission 
decision was required." ^''' Although the Review Board in recent 



"It must be filed within 30 days of the decision. 47 C.F.R. § 1.115(d) (1968). 

"47 U.S.C. § 155(d)(5) (1964). 

'^ FCC, Revietw Board Progress Report, April 1965, Table No. 3, n.l. More thorough con- 
sideration of the issues, however, may be a countervailing benefit. 

"Comments of Chairman E. William Henry, in Staff of the Subcomm. on Administrative 
Practice and Procedure of the Senate Comm. on the Judiciary, 89th Cong., 2d Sess., 
Questionnaire Survey on Delay in Administrative Proceedings 35, 36 (Comm. Print 1966). 



136 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

years has found itself taking increasing amounts of time to decide 
matters before it, such figures cannot of course fairly be com- 
pared with the Commission's 1961 statistics. No one can know 
how long today's Commission, with new responsibilities in the 
areas of CATV and satellite communications, would require, in 
the absence of a Review Board, to decide adjudicatory appeals. 
In addition to improving the agency's hearing processes, the 
Commission regards creation of the Review Board as having 
resulted in a second substantial benefit : 

[By virtue of delegations made to the Board in hearing proceedings, 
the Commission has been enabled to devote a significantly larger portion 
of its time and energies to major matters of policy and planning and to 
cases of adjudication involving issues of general communications impor- 
tance. Wie cannot stress the importance of this benefit too strongly. There 
is an ever-increasing number of complex and vital policy matters coming 
before the Commission because of the changing nature of the communica- 
tions field {e.g., CATV, space satellite, network television procurement 
and production). These matters call for close study by the Commission 
and frequent meetings of Commissioners where there can be the neces- 
sary exchange of views and evolvement of policy. The Review Board, by 
taking over the routine hearing cases, has contributed significantly to the 
Commission's ability to devote more time and effort to these important 
policy issues.^' 

Statistics appended to the Commission's progress report give 
some suggestion of the amount of time that creation of the Re- 
view Board has freed for members of the agency to devote to du- 
ties other than adjudication. During the 29-month period (March 
1, 1960 to July 31, 1962) immediately preceding creation of the 
Review Board, the Commission devoted a total of 45 days or 
partial days, representing 130 hours, to hearing oral argument. 
By comparison, during the 29-month period immediately follow- 
ing creation of the Review Board (August 1, 1962 to December 
31, 1964), the Commission devoted only 29 days or partial days, 
representing 81 hours, to hearing oral argument." 

These figures understate the savings in Commission time that 
resulted from creation of the Review Board. They do not refiect 
the concomitant savings in time that a reduction in adjudicatory 
appellate responsibilities produces in preparing for oral argu- 
ment, deliberating, and drafting final opinions. Furthermore, these 
figures include cases within the Review Board's jurisdiction that 
were designated for hearing before the Review Board was estab- 
lished and, under a "grandfather clause," retained on the Com- 
mission's docket, as well as television cases, which were not 



"» FCC, Review Board Progress Report, April 1965, at 6 (footnote omitted). 
" FCC, Review Board Progress Report, April 1965, Table No. 4. 



REC. 6. DELEGATION OF DECISION MAKING 137 

placed within the Review Board's jurisdiction until June 15, 

ige^-^^^ 

It has become clear in recent years that what the Commission 
calls the "second substantial benefit"— freeing agency members 
from the demands of many adjudicatory appeals — ought to be 
regarded as the Review Board's most significant contribution. 

The experience of the Federal Communications Commission 
suggests that creation of an intermediate appellate Review Board 
can bring significant benefits to the regulatory process. A Review 
Board can apply agency policy with more consistency and more 
detailed attention to the record than can the agency members 
themselves. A Review Board can reduce the average time required 
by the agency to dispose of a proceeding. Most important, a 
Review Board can free the time of agency members to consider 
matters of policy and planning by disposing of an absolute num- 
ber of adjudications that the members of the agency need not 
decide. These benefits are, as the Commission properly character- 
ized them, substantial. 

DEFINITION OF A REVIEW BOARD'S ROLE 

Two Models of Review Board 

The performance of the FCC Review Board has been shaped 
by its structure, jurisdiction, and authority. Before deciding to 
create an intermediate appellate Review Board, an agency must 
make some preliminary judgments about the function the Board 
is to perform. Unless judgments about form and function are 
thoughtfully reached, the establishment of a Review Board may 
only add another stage of administrative proceedings, achieving 
no countervailing gain. The agency's goal must be to identify and 
describe a differentiated function for the Board, and to give it a 
mandate that will enable it to perform that function well. 

This section of the study will explore some of the considerations 
relevant to the decision to create a Review Board. In undertaking 
this exploration, it will be useful to make reference to two models 
of a Review Board— the "judicial model" and the "administrative 
model." The terms lack precision; they do not correspond to an 
absolute reality. But they provide a convenient framework for 
describing two different conceptions of the function that a Review 
Board might serve. The models do not of course exhaust the 
possible conceptions of a Review Board; nor should they be re- 
garded as describing even polar conceptions, for they do not. 

^ 2 FCC, Review Board Progress Report, April 1965, Table No. 4, n.l. 



138 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

The models are intended only to suggest that value judgments 
concerning the appropriate functions of a Review Board arei 
closely related to the details of the Board's structure, jurisdiction, 
and authority. 

The judicial model conceives the function of a Review Board 
as primarily deciding appeals from initial decisions of hearing 
examiners in adjudicative cases as nearly as possible on the basis 
of precedent and formal statements of agency policy. The Board 
is expected to apply existing law rather than to make new policy, 
although of necessity it "may consider the extension of present 
policies to include new factual situations." ^® When policy issues 
of first impression arise, the Board is expected to certify them to 
the members of the agency for decision. The judicial model posits 
the Board's function in deciding questions of law as analogous to i 
that of a lower court subject to review by an appellate tribunal. ] 

The administrative model conceives the function of a Review j 
Board as blending at least some of the roles — deciding appeals in 
adjudicative cases as well as formulating policy — that members 
of the agency perform. The Board is expected to speak the 
agency's mind, not merely to rephrase prior statements ; to decide 
issues as it believes the agency would decide them, whether or 
not precedent reaches that far. The Board is expected to con- 
tribute through its work to the formulation, rather than the 
mere application, of agency policy. Because its job is to serve i 
almost as an alter ego of the agency, a Review Board based on \ 
the administrative model would have a wider jurisdiction and 
greater substantive authority than one based on the judicial 
model. 

Jurisdiction 

In creating a Review Board, one of the most important concerns 
that an agency must confront is the appropriate definition of the ! 
Review Board's jurisdiction. The Federal Communications Act 
authorized the Commission to create a Review Board to perform , 
"any of its functions . . . including functions with respect to ', 
hearing, determining, ordering, certifying, reporting, or other- 
wise acting as to any work, business, or matter." ®° The Commis- 
sion elected to create a Review Board based upon the judicial mod- 
el. It granted the Review Board authority to act in three general 
areas: review of initial decisions of hearing examiners in all ad- 
judicative matters, including mixed adjudicative and rulemaking 



59 Charles County Broadcasting Co., 25 P & F Radio Reg. 903, 907 (1963). 
80 47 U.S.C § 155(d)(1) (1964). 



REC. 6. DELEGATION OF DECISION MAKING 139 

proceedings; interlocutory appeals from rulings of hearing ex- 
aminers; and original jurisdiction in two important areas of in- 
terlocutory matters. The decisions that the Federal Communica- 
tions Commission made in defining the jurisdiction of its Review 
Board may usefully be examined. 

In amending the Federal Communications Act to authorize the 
creation of a Review Board, Congress did not attempt to describe 
the jurisdiction of the Review Board. Instead, it gave the Com- 
mission complete freedom to determine which of its functions 
should be delegated to the Review Board. This freedom has allowed 
the Commission to adjust the Review Board's jurisdiction in light 
of the Board's performance and of changing exigencies within the 
Commission. Thus, in 1964 the Commission enlarged the Review 
Board's authority to review additional categories of initial de- 
cisions.*'^ It was the Commission's freedom to make these changes 
on its own motion that made them possible at all. Had Congress 
defined the Review Board's jurisdiction, redefinition would have 
required an amendment to the statute ; it is plain that the legisla- 
tive process could not fashion such redefinitions with either the 
sensitivity or the celerity of an agency. 

If a Review Board is to make a significant contribution 
toward expediting agency decisions and freeing agency members' 
time, the agency must be prepared to grant it a subject matter 
jurisdiction that accounts for a large number of cases and to allow 
most of its decisions to become final. The success of the FCC 
Review Board, as the discussion above indicates,*^ supports this 
principle. 

Equally crucial to the success of a Review Board will be the 
capacity of the members of the agency to identify the classes of 
cases appropriate for intermediate appellate review procedures. 
If the members of the agency fail in this task, creation of a 
Review Board will only add to delay. What principles are relevant 
to making this determination? One commentator has written: 

[M]any of the very complex cases such as route cases in the CAB or 
large merger cases before the ICC depend on the relevance and interrela- 
tion of a very large number of "economic facts" such as the effect of the 
merger or new route, or the validity of a complicated cost study. 

. . . The agency, in evaluating the appropriateness of a new route, 
for example, is really performing the managerial function of resource al- 
location; the ultimate decision involves a judgment concerning the 
relationship among an open-ended series of variables, and the final 
determination in the particular case cannot be deduced from a generally 
applicable rule. Policy formulation in the legislative sense is not possible; 



"'47 C.F.R J 0.365 (1968). 

" See text accompanying notes 48-55 svpra. 



140 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

a system of intermediate appellate review cannot reduce delay in the 
disposition of cases without compelling the agency to formulate artificial 
guidelines for the allocation of industry resources."' 

The jurisdiction that the Federal Communications Commis- 
sion gave to its Review Board is appropriate for a Review Board 
based on the judicial model because it is limited to cases involv- 
ing policy application rather than policy formulation. An agency 
whose docket includes a high percentage of cases involving policy 
formulation might benefit only from a Review Board based upon 
the administrative model ; such a Review Board would require 
jurisdiction over quasi-legislative or rulemaking proceedings. 

Review of the Review Board 

The amendment to the Federal Communications Act that au- 
thorized creation of a Review Board also provides for review of 
its decisions. Any person aggrieved may apply to the Commission 
for review ; the Commission may also review Board decisions on its 
own motion. Absent such review, a decision or order of the Board 
becomes that of the Commission. Application for review is a 
condition precedent to judicial review of the Commission's 
action.''' 

The most notable aspect of these provisions is the freedom and 
responsibility left the Commission to design a system to review 
decisions of the Review Board. By providing that a decision of the 
Review Board shall become the decision of the Commission ab- 
sent such review, the statute grants the Commission the freedom 



" Note, Intermediate Appellate Review Boards for Administrative Agencies, 81 Harv. L. 
Rev. 1325, 1331 (1968) (footnote omitted). 
"47 U.S.C. § 155(d) provides in part: 

(3) Any order, decision, report, or action made or taken pursuant to any such dele- 
gation, unless reviewed as provided in paragraph (4) of this subsection, shall have the 
same force and effect, and shall be made, evidenced, and enforced in the same manner, 
as orders, decisions, reports, or other actions of the Commission. 

(4) Any person aggrieved by any such order, desion, report or action may file an 
application for review by the Commission within such time and in such manner as the 
Commission shall prescribe, and every such application shall be passed upon by the 
Commission. The Commission, on its own initiative, may review in whole or in part, 
at such time and in such manner as it shall determine, any order, decision, report, or 
action made or taken pursuant to any delegation under paragraph (1) of this subsection. 

(5) In passing upon applications for review, the Commission may grant in whole 
or in part, or deny such applications without specifying any reasons therefor. No such 
application for review shall rely on questions of fact or law upon which the panel of com- 
missioners, individual commissioner, employee board, or individual employee has been 
afforded no opportunity to pass. 

(6) If the Commission grants the application for review, it may affirm, modify, or 
set aside the order, decision, report, or action, or it may order a rehearing upon such 
order, decision, report, or action in accordance with section 405 of this title. 

(7) The filing of an application for review under this subsection shall be a condition 
precedent to judicial review of any order, decision, report, or action made or taken 
pursuant to a delegation under paragraph (1) of this subsection. 



REC. 6. DELEGATION OF DECISION MAKING 141 

to make final any Review Board decisions it chooses. By providing 
that review of Review Board decisions shall be "in such manner 
as the Commission shall prescribe," the statute grants the Com- 
mission the responsibility of selecting wise principles of review/'^' 
An examination of the principles selected by the Commission 
is instructive. Under the Commission's regulations, any person 
aggrieved by a decision of the Review Board may file an applica- 
tion requesting review by the Commission : 

(b) (2) The application for review shall specify with particularity, 
from among the following, the factor (s) which warrant Commission con- 
sideration of the questions presented : 

(i) The action taken pursuant to delegated authority is in conflict 
with statute, regulation, case precedent, or established Commission 
policy. 

(ii) The action involves a question of law or policy which has not 
previously been resolved by the Commission. 

(iii) The action involves application of a precedent or policy 
which should be overturned or revised. 

(iv) An erroneous finding as to an important or material question 
of fact. 

(v) Prejudicial procedural error. 

(c) No application for review will be granted if it relies on questions 
of fact or law upon which the designated authority has been afforded no 
opportunity to pass.®* 

A note to the Commission's regulations advises persons seeking 
review by the Commission that "the application for review should 
be prepared with the understanding that its purpose is not to 
obtain a Commission decision on the merits of the issues but 
rather to convince the Commission to review those issues." *'' 

The regulations make plain that the Commission has the au- 
thority on its own motion to order the record of a proceeding 
before it for review ; ^^ it is not dependent upon the motion of a 
person aggrieved. Once an application for review has been filed 
with the Commission, it "may grant the application for review in 

«5 Lawyers who regularly practice before an agency may be concerned that creation of a 
Review Board will reduce their access to members of the agency. So long as a petition for 
review may be filed with the members of the agency, the substance of this concern is that 
creation of a Review Board will reduce a lawyer's opportunity to argue important issues 
of administrative policy to the presidential appointees who are finally responsible for the 
formulation of agency policy. This concern can be greatly tempered, however, by wise 
agency action in granting and denying review of decisions below. Indeed, agencies are 
likely to be as sensitive as their practitioners to the existence of policy issues that require 
responsible consideration at the very top ; members of agencies are not likely, by design or in- 
advertence, to forfeit their authority to decide these issues. An agency can also temper this 
concern by following the procedure that the FCC followed in establishing its Review Board 
of soliciting comments on its proposed regulations before making them final. See Fitzgerald, 
Trends in Federal Administrative Procedure. 19 Sw. L.J. 239 262 (1965). 

»«47 C.F.R. § 1.115 (1968). 

«M7 C.F.R. § 1.115 (1968). 

"8 47 C.F.R. § 1.117(a) (1968). 



142 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

whole or in part, or may deny the application, without specifying 
reasons for the action taken." '^^ If the Commission grants the 
application for review, "it may order such further procedure, in- 
cluding briefs and oral argument, as it may deem useful" ^° and 
may affirm, reverse, modify, or set aside the Review Board's action 
or may remand the proceeding for reconsideration.^^ 

These regulations give the Commission complete control over 
selection of cases for review. They do not require the Commission 
to grant an application for review in any case; this means the 
Commission can realize the time-freeing potential of the Review 
Board to the extent it chooses. The regulations do not prohibit 
the Commission from granting an application for review in any 
case and they allow the Commission to bring up cases for review 
on its own motion; this means the Commission has authority to 
place its imprint on the aggregate work product of the Review 
Board. 

Review of decisions of the Review Board is thus totally at the 
option of the Commission. There is much to be said for this 
arrangement. First, the Commission cannot be committed by Re- 
view Board action to a position that the members of the agency 
do not share. The Commission's regulations take full account of 
Professor Davis' view that "the policy judgment should be an easy 
one that no one but the Presidential appointees can have final 
responsibility for what is done in the name of an agency. The 
agency heads should have power to delegate, but they should 
lack power to delegate in such a way as to deprive themselves of 
their residual power." " 

Second, the Commission cannot be bound by findings of fact 
with which it disagrees, even if the hearing examiner and the 
Review Board have concurred in finding them. The Commission 
retains, in the language of the Administrative Procedure Act, 
"all the powers which it would have in making the initial de- 
cision." " Retention by the Commission of plenary power to resolve 
issues of material fact is preferable to any limitation by such 
formulations as "unless clearly erroneous" or "unless contrary to 
the weight of the evidence." Chairman McCulloch of the National 
Labor Relations Board has pointed out that "in many cases ques- 



«»47 C.F.R. § 1.115 (g) (1968). 

™47 C.F.R. § 1.115(h) (1968). 

"47 C.F.R. § 1.115(i) (1968). 

" Statement of Kenneth C. Davis, in Hearings on S. 1663 Before the Subcomm. on 
Administrative Practice and Procedure of the Senate Comm. on the Judiciary, 88th Cong., 2d 
Sess. 256 (1964). 

" Administrative Procedure Act § 8, 80 Stat. 387, 5 U.S.C. § 557(b) (Supp. Ill, 1968). 



REC. 6. DELEGATION OF DECISION MAKING 143 

tiorivS of law, policy, and fact are intermingled." "' Wise resolution 
of questions of law and policy may be thwarted if an agency lacks 
the authority to disagree with the Review Board's evaluation of 
intermingled questions of fact. 

Third, the Commission cannot be precluded from reviewing a 
case merely because the grounds upon which review is sought do 
not meet the suggested criteria for granting an application for 
review. The Commission might, for example, choose to review a 
proceeding because the proposed agency action involves severe 
consequences for a party. There is a symbolic value in such re- 
view — attention by presidential appointees to individual instances 
of special hardship — which makes its retention important. A sys- 
tem that limited review by agency members to specified grounds 
or specified issues could deny recognition to this value. 

Problems in Establishing a Review Board 
Appointment 

A Review Board will be valuable only if an agency is prepared 
to make first-rate appointments to the Board. There can be no 
compromise with this principle if the Review Board is to win 
respect or acceptance from hearing examiners, the agency's staff, 
and the practicing bar. If the Review Board fails to win both 
respect and acceptance, pressures to abolish it will gather. 

The success of the FCC Review Board rests in part on the fact 
that the original appointees (all of whom still serve) are persons of 
undoubted ability and extensive experience. All five had achieved 
high position within the agency before being named to the Review 
Board. '"^ They brought varied experience to their joint work ; they 
were, in the statutory language, "qualified by reason of their 
training, experience, and competence, to perform such review 
functions." "^ 

The FCC's decision to name senior staff employees to the 
Review Board undoubtedly thinned the ranks at a very important 
level. But the price had to be paid; it gave an earnest of the 
agency's commitment to making the Review Board work. Ad- 
herence to this commitment will not exact as great a price in the 



''* Statement of Frank W. McCulloch, Chairman of the National Labor Relations Board, in 
Hearings on S. 518 Before the Subcomm. on Adminittrative Practice and Procedure of the 
Senate Comm. on the Judiciary, 90th Cong., Ist Sess. 223 (1967). 

" Two had served as Chief of the Office of Opinions and Review, one had been Chief of the 
Renewal and Transfer Division of the Broadcast Bureau, one had been Assistant General 
Counsel in charge of the Regulatory Division, and one had been an Engineering Assistant to a 
Commissioner. 

"47 U.S.C. § 155(d)(8) (1964). 



144 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

future ; once the members of the original Board have been named, 
vacancies can be expected to occur one at a time. 

Four further comments about the selection of Review Board 
members may be worth making. First, an agency may think it 
desirable on occasion to select a hearing examiner to serve on its 
Review Board. Some of the arguments supporting the occasional 
selection of a hearing examiner are similar to those supporting 
the occasional selection of a trial judge to serve on an appellate 
court. Persons experienced in the discipline of finding facts bring 
a useful and particularized expertise to the review function. The 
possibility of promotion is valuable both in attracting able men 
to the corps of hearing examiners and in sustaining their morale 
after they undertake service. And finally, hearing examiners will 
more tolerantly accept reversals of their decisions when at least 
one of the Review Board members has first-hand knowledge of 
the conditions under which examiners work. 

Second, the members of an agency may think it desirable on 
occasion to select a non-lawyer, such as an engineer or a rate 
expert, to serve on its Review Board. The selection of a non- 
lawyer may be particularly appropriate when sophisticated 
technical expertise is necessary for resolution of cases within 
the Review Board's jurisdiction. Although technical experts 
could be assigned to the Review Board's staff, an agency might 
well conclude that Board members are more likely to listen 
to a technical expert if he is a colleague and peer rather than a 
staff subordinate. The decision of the FCC Review Board, com- 
posed of four lawyers and an engineer, to sit in ten randomly- 
selected panels of three means that some panels consist of three 
lawyers while others consist of two lawyers and an engineer. 
Lawyers who regularly practice before the FCC do not seem to 
regard the difference as significant. This suggests that there 
should not be an a priori bar to the selection of a non-lawyer 
to serve on a Review Board even if it is constructed on the 
judicial model. 

Third, an agency ought not regard itself as limited to selecting 
only senior staff employees to serve on its Review Board. The 
test of selection must be suitability to perform the Review 
Board's functions. Some senior staff employees ably suited for 
their present responsibilities may not have the particular quali- 
ties that service on the Review Board will require; more junior 
employees may possess these qualities. Conversely, an agency may 
think it desirable to have a Commissioner serve on the Review 
Board, particularly if its functions approximate those of the 
administrative model. It should be noted, however, that the 



REC. 6. DELEGATION OF DECISION MAKING 145 

presence of a Commissioner — whose party affiliation would be a 

matter of public record — would prevent the Review Board on 

I which he served from having the bipartisan character that 

' Congress has typically required for actions by presidential ap- 

i pointees;" in addition, the presence of a Commissioner might 

I inhibit his Review Board colleagues from disagreeing with him 

and deter his colleagues on the agency from reversing Review 

Board decisions in which he paiticipated. 

Fourth, an agency's commitment to the theory of a Review 
! Board will be tested when a vacancy occurs, perhaps several 
years after the Board has been created, perhaps when several 
new members sit on the agency. It is imperative that an agency, 
in filling the vacancy, not succumb to the false assumption that 
> the Review Board has become an institution able to perform its 
function and retain its authority without regard to the quality 
of the appointment made. An agency that uses Review Board 
vacancies to solve problems presented by staff employees who 
have not worked out well in their present positions will sub- 
stantially weaken the Review Board. 

j Statics and Tenure 

The GS status of Review Board members is directly related to 
the quality of persons who will accept service on the Review 
Board and to the Review Board's ability to command respect 
within the agency and without. Unless staff members and the 
practicing bar regard appointment to the Review Board as a 
promotion to a very senior position in the Civil Service hierarchy, 
the prestige and authority of the Review Board will suffer. 

The Federal Communications Act requires that Review Board 
members "be in a grade classification or salary level commensu- 
rate with their important duties, and in no event less than the 
grade classification or salary level of the employee or employees 
whose actions are to be reviewed." "' Hearing examiners at the 
FCC, as in most other places in the federal government, hold 
GS-16 positions. All five members of the Review Board hold 
GS-17 grade classifications. Although the statutory requirement 
is met as long as members of the Review Board hold GS-16 
grade classifications, the elevation in grade classification is ob- 
viously desirable. 

By comparison, the Interstate Commerce Act does not place 
grade classification requirements on appointments to ICC Review 



"See. e.g.. Federal Communications Act § 154(b), 47 U.S.C. § 154(b) (1964); Federal Trade 
Commission Act § 1, 15 U.S.C. § 41 (1964). 
"47 U.S.C. § 155(d) (8) (1964). 



146 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

Boards. None of the fifteen members of the agency's five Review 
Boards holds a GS-17 position, and only four chairmen hold 
GS-16 positions; the fifth chairman and the remaining ten mem- 
bers hold GS-15 positions. It is not surprising that the ICC has 
great difficulty in persuading GS-16 hearing examiners to take 
GS-15 or GS-16 Review Board positions, particularly in view 
of the greater tenure protections that examiners enjoy under the 
Administrative Procedure Act."^ This problem is more easily 
described than remedied, since most agencies will have only a 
limited number of super-grades (GS-16 through -18) available. 

Related to the question of status is that of tenure. In creating a 
Review Board, an agency will have to decide on the term of oflfice 
of its members. Several alternatives are possible. 

An agency might believe that Review Board members should 
hold office indefinitely and be removable only for cause. This 
arrangement would be similar to that enjoyed by hearing ex- 
aminers. Such a judgment would be consistent with creation of 
a Review Board based upon a judicial model. Such an essentially 
tenured status — assuming that an agency could grant it in the 
absence of specific statutory authority — would preserve the in- 
dependence of Review Board members and protect them against 
the fear (whether real or imagined) of reprisal for decisions 
they have rendered. It would also, no doubt, be an attractive 
factor in persuading able staff employees to accept appointment 
to a Review Board. 

The five members of the FCC Review Board have no formal 
protection against removal, although an FCC regulation provides 
that they shall "serve indefinitely" ; *" they are as vulnerable as 
other staff employees to being shifted to other positions within 
the agency. It seems clear, however, that institutional norms and 
expectations have developed that would exert strong moral pres- 
sure against removal of a member of the Review Board for any- 
thing less than substantial reasons. This may suggest that Review 
Board members performing essentially judicial functions can 
achieve significant de facto protection against removal without 
good cause, even if formal provision granting such protection is 
not or cannot be made. 

The fact that members of the FCC Review Board have GS-17 
status also serves as a deterrent to removal. They could not be 
shifted to other positions within the agency without being re- 



™ Section 11 of the Administrative Procedure Act provides that a hearing examiner "may be 
removed by the agency in which he is employed only for good cause established and determined 
by the Civil Service Commission on the record after opportunity for hearing." 80 Stat. 528, 5 
U.S.C. § 7521 (Supp. Ill, 1968). 

«'47 C.F.R. § 0.361(e) (1968). 



REC. 6. DELEGATION OF DECISION MAKING 147 

quired to accept a lower grade classification ; an agency is likely 
to hesitate before exacting such a sacrifice. Granting a GS-17 
status to Review Board members may provide a protection 
against removal which is similar to that enjoyed by hearing 
examiners, without severely restricting an agency's power to 
make changes in Review Board membership in unusual situations. 

An agency, of course, might believe that Review Board mem- 
bers should be removable more readily than a "for good cause" 
rule would allow. This arrangement would be consistent with 
the creation of a Review Board designefd to approximate the 
administrative model. It would allow the agency to change the 
membership of the Review Board to reflect changes in the mem- 
bership and philosophy of the agency itself. An agency might 
adopt such an arrangement if it believed that a Review Board 
could fulfill its purposes best when its members were sympathetic 
with and responsive to the views of present agency members. 
However, an agency's authority to bypass the Review Board 
and directly review hearing examiners' decisions may minimize 
the necessity of making Review Board members readily remov- 
able in order to promptly implement changes in agency policy. 

Other arrangements are also possible. Review Board members 
might, for example, be appointed for a fixed term of years; 
provision could be made for reappointment. An agency that 
adopted such an arrangement could achieve certain gains in 
flexibility and in the renewal of energy that a system of rotation 
offers. An arrangement that contemplated rotating terms of serv- 
ice might make it easier professionally for a Review Board 
member to remain at the agency in another position when his 
term expired. 

Insvlation From Ex Parte Contacts 

The degree to which Review Board members should be in- 
sulated from contact with members of the agency or members 
of the staflf will depend largely upon the function that the Review 
Board is expected to perform. The more nearly the Review Board 
is based upon the judicial model, the more appropriate it may 
seem to insulate its members from discussions of cases pending 
before it. 

The FCC Review Board is insulated by several statutory pro- 
visions and regulations. Section 409(c)(1) of the Federal Com- 
munications Act provides : 

In any case of adjudication (as defined in the Administrative Proce- 
dure Act) which has been designated by the Commission for a hearing, 
no person who has participated in the presentation or preparation for 



148 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

presentation of such case at the hearing or upon review shall (except to 
the extent required for the disposition of ex parte matters as authorized i, 
by law) directly or indirectly make any additional presentation respect-; 
ing such case to the hearing officer or officers or to the Commission, or to i 
any authority within the Commission to whom, in such case, review func- ' 
tions have been delegated by the Commission under section 155(d) (1) of 
this title, unless upon notice and opportunity for all parties to 
participate/' 

This section represents a congressional judgment that interested 
persons and agency staff members who have participated in the 
preparation or presentation of a case should not have any ad- 
ditional and ex parte contact with the authority that will decide 
the case, whether it be the Review Board or the members of the 
agency. In addition, section 155(d)(8) directs that Review Board 
members 

shall not be responsible to or subject to the supervision or direction of 
any officer, employee, or agent engaged in the performance of investiga- 
tive or prosecuting functions for any agency." ! 

These two statutory provisions are reinforced by an FCC I 
regulation : j 

i 

Neither the Commission nor any of its members will discuss the merits i 
of any matters pending before the Boai'd with the Board or any of its 
members.*^ : 

In practice, these provisions mean that members of the FCC 
Review Board do not discuss the merits of specific cases pending 
before them with anyone in the agency. One reason the Review , 
Board has been given its own staff of lawyers, opinion writers, i 
and technical experts is to make unnecessary any consultation | 
between Review Board members and agency employees who ! 
also serve the members of the agency. : 

The manner in which the insulation of the FCC Review Board 
has been achieved is consistent with the judicial model. A Review . 
Board based on the administrative model might function dif- i 
ferently. An agency creating such a Review Board might think j 
it desirable to permit consultation on some occasions between j 
members of the Review Board and members of the agency and j 
its staff. Although it may be assumed that members of the i 
Review Board would not discuss pending adjudicatory proceed- 
ings with members of the agency or with the staff, such con- ' 
sulfation would not be inappropriate when a Review Board has ; 
been delegated the task of rulemaking. i 



"47 U.S.C. § 409(c)(1) (1964). 
8=47 U.S.C. § 155(d)(8) (1964). 
«'47 C.F.R. § 0.361(e) (1968). 



REC. 6. DELEGATION OF DECISION MAKING 149 

Because rulemaking proceedings often involve large issues of 
policy and have relevance to significant areas of the agency's 
jurisdiction, an agency might properly believe that Review Board 
members ought not be insulated from staff members whose ex- 
perience would be helpful in formulating a sound rule. Full access 
to the agency's staff might also reduce the likelihood that the 
agency would reject a Review Board decision based on the 
months of costly proceedings typical of rulemaking. In addition, 
a decision by an agency to grant the Review Board a significant 
role in the formulation of rules may bring Review Board members 
into an advantageous competition with other agency employees, 
such as bureau chiefs, who otherwise would make the only recom- 
mendations to members of the agency on the lines that new 
policy should follow. 

Response of Hearing Examiners 

The decision to create a Review Board may cause concern 
among an agency's hearing examiners. Professor Davis, comment- 
ing in 1965 on experience at the FCC, said "Examiners, of 
course, are opposed to the whole idea of the Review Board, for 
they prefer the idea of limited review of examiners' initial de- 
cisions." ^' The statement is probably less true today than it was 
in 1965, largely because hearing examiners have learned that the 
Review Board's success in the predictable application of stand- 
ards has increased their opportunities to make decisions that will 
not be appealed or will stand upon appeal.*''^ 

Nevertheless, the creation of a Review Board means that exam- 
iners' decisions will be reviewed in the first instance by employees 
of the agency rather than by presidential appointees ; examiners 
may regard this as diminishing their stature in the agency's over- 
all decision-making process.*''^ Sometimes it may mean, as it does 
at the ICC, that decisions of GS-16 examiners will be reviewed 
by GS-15 members of Review Boards. Sometimes it may mean, 
as it does at the FCC, that examiners' decisions will be reviewed 
by a Review Board whose membership does not include anyone 
with experience as a hearing examiner. The members of the Re- 
view Board may give the impression that they do not have com- 



*M K. Davis, Administrative Law Treatise §9.05 (Supp. 1965). The Federal Trial 
Examiners Conference opposed the legislation authorizing the FCC and ICC Review Boards. 
Hearings Before the Subcomm. on Communicationa of the Senate Comm. on Commerce on 
Reorganization of FCC. 87th Con., 1st Sess. 82-83 (1961). 

'^Cf. E. Redford, National Regulatory Commissions: Need for a New Look 12-13 (1959). 
But cf. text accompanying note 87 infra. 

** See Auerbach, Scope of Authority of Federal Administrative Agencies to Delegate Decision 
Making to Hearing Examiners, 48 MiNN. L. Rev. 823, 866 (1964). 



150 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

plete respect for the competence of hearing examiners; one 
hearing examiner at the FCC reported to a Senate subcommittee 
that the members of the Review Board "regard the initial deci- 
sion as a point of departure. To them it is pretty much just 
another pleading." «" Under these circumstances hearing exam- 
iners may see the creation of a Review Board as a threat to their 
status and prestige; the result may be a lowering of morale. 
These are human concerns — perhaps they are inevitable — and 
to some degree they can be met by sensible administration. They 
may be accompanied, however, by a deeper concern impossible 
to accommodate: the concern, plainly justified by the example of 
the FCC Review Board, that a Review Board is more likely to 
give intensive scrutiny to the record than members of the agency 
typically do, and is more likely to notice procedural lapses, in- 
sufllciencies of proof, and examiners' errors. This, of course, is 
one of the functions of a Review Board. 

The Desirability of Enabling Legislation 

The success of the FCC Review Board raises the question of the 
desirability of legislation that would extend the concept of in- 
termediate appellate review procedures to other agencies. Pro- 
posals calling for such an extension to most of the federal admin- 
istrative agencies have been made in three recent sessions of 
Congress.8« Few agencies have been opposed to permissive legisla- 
tion that would enable agencies in their discretion to establish a 
Review Board. Almost every agency has objected, however, to 
blanket legislation that would compel agencies to establish a Re- 
view Board; this has been true even when the proposed legisla- 
tion has provided some statutory exceptions for circumstances in 
which use of a Review Board might be unnecessary or inappro- 
priate.^^ 

Extensive testimony offered at congressional hearings over a 

'^ Comments of Thomas A. Donahue, in Staff of the Subcx)mm. on Administrative Practice 
AND Procedure of the Senate Comm. on the Judiciary, 89th Cong., 2d Sess., Questionnaire 
Survey on Delay in Administrative Proceedings 235 (Comm. Print 1966). 

s»S. 1663, 88th Cong., 1st Sess. (1963) ; S. 1336, 89th Cong.. 1st Sess. (1965) ; S. 518, 90th 
Cong., 1st Sess. (1967). S. 1336 passed the Senate but failed in the House. The most recent 
proposal, S. 518, provided: 

Except to the extent that the establishment of an agency appeal board is clearly 
unwarranted by the number of proceedings in which exceptions are filed or that agency 
appellate procedures have been otherwise provided by Congress: (A) Each agency shall 
establish by rule one or more agency appeal boards composed of agency members, hearing 
examiners (other than the presiding officer), or both. 
S. 518, 90th Cong., 1st Sess. § 8(c) (2) (1967). See Byse, The Judicial Review Provisions of S. 
518, The Proposed Administrative Procedure Act of 1967, 20 Ad. L. Rev. 198 (1968). 

*' Note, Intermediate Appellate Revietv Boards for Administrative Agencies, 81 Harv. L. Rev. 
1325, 1333 (1968). 



REC. 6. DELEGATION OF DECISION MAKING 151 

period of years has made clear that legislation compelling all 
agencies to create Review Boards would be unwise. The basic 
reason, subject to illustration by many examples, is that such 
legislation would place the differentiated procedures of agencies 
with disparate functions "in a straitjacket;" '"- it might not allow 
an agency the flexibility, for example, of creating a Review Board 
for certain classes of cases only, or for certain separable parts of 
cases. Or it might require review procedures of agencies that have 
no need of them. 

Some agencies may have manageable workloads that do not 
disable their members from giving adequate attention to their 
adjudicatory and policy-making duties. Chairman White of the 
Federal Power Commission told a Senate subcommittee in 1967, 
"The Commission does not have many appeal proceedings. Thus, 
29 examiners' decisions were rendered in 1966 and exceptions 
were taken or review instituted on the Commission's own motion 
in 25 cases. In my judgment, 25 contested gas and electric cases a 
year do not justify the appeal board procedure, considering the 
substantial expenditures of money and people that 'an appeal 
board would require." ^^ When the members of an agency are called 
upon to decide a relatively small volume of adjudicatory cases, 
creation of a Review Board may be unnecessary either to expedite 
the disposition of adjudicatory proceedings or to free the time of 
agency members for policy-making tasks. 

Most agencies, of course, have a greater number of appeals than 
Chairman White describes for the Federal Power Commis- 
sion. However, they may have devised procedures to make their 
workloads manageable. The Securities and Exchange Commis- 
sion, for example, has the power to control the number of cases 
on its adjudicatory docket; its docket of contested hearings is 
limited to cases that it elects to initiate. This is a power denied to 
agencies such as the Federal Communications Commission that 
must respond to applications and petitions filed by private parties. 
By carefully limiting the number of cases that it brings, by some- 
times chastising informally rather than proceeding to an adminis- 
trative hearing, by inviting offers of settlement, by entering into 
consent agreements, the Securities and Exchange Commission is 
able to exercise a significant measure of control over its workload 
and thereby increase its regulatory efficiency. However, "the fact 
that a particular agency may be keeping abreast of its work does 



" Comments of Chairman hee C. White, in Hearings on S. 518 Before the Subcomm. on 
Administrative Practice and Procedure of the Senate Comm. on the Judiciary, 90th Cong., 1st 
Sess. 189 (1967). 



152 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

not always indicate that it is making the wisest use of the time 
and skills of its members and staff." ^- It may indicate instead 
that the agency has artificially limited the size of its docket so 
that its workload, although manageable, does not include enough 
cases to allow it to effectuate the regulatory aims of the statute 
entrusted to its administration.^^ Therefore, the fact that an 
agency has succeeded in limiting its workload to a manageable 
size will not always be inconsistent with the possibility that in- 
termediate appellate review procedures are desirable. 

Other agencies may seek to make their workloads more manage- 
able by adopting discretionary review procedures at the agency 
level. The Civil Aeronautics Board adopted such procedures in 
1963 pursuant to authority granted by Reorganization Plan No. 3 
of 1961 ; ^* several other agencies possess similar authority but 
have not exercised it,^^ Discretionary review procedures allow 
the members of an agency to limit their plenary consideration to 
cases that raise issues of the greatest importance. ^^ An agency 
should adopt such procedures only if it has sufficient confidence 
in the work of its hearing examiners to allow a significant per- 
centage of initial decisions to stand unreviewed. An agency which 
believes that its hearing examiners merit such confidence also 
might charge them with considerably more power over the conduct 
of the hearing than they may now possess and might limit time- 
consuming interlocutory appeals. Because "almost 30 percent of 
all the hearing examiners in federal service (161 out of 578) may 
retire from service during the next three years as a result of 
mandatory or optional retirement," ^' agencies will have a signifi- 
cant opportunity to strengthen the quality of the hearing exam- 
iner corps. In these circumstances, an agency that has the author- 
ity to adopt discretionary review procedures may conclude that 
such procedures are at least as likely to free the time of agency 
members as would an intermediate appellate review system. 

Still other agencies whose workloads might seem to suggest the 



^ Committee on Internal Organization and Procedure, Delegation of Final Decisional 
Authority, in Selected Reports of the Administrative Conference of the United States, S. Doc. 
No. 24, 88th Cong., 1st Sess. 157, 158-59 (1963). 

^^See Phillips Petroleum Co., 24 F.P.C. 537, 546 (1960), aff'd, 303 F.2d 380 (D.C. Cir. 1961), 
affirmed sub nom. Wisconsin v. FPC, 373 U.S. 294 (1963). 

M Reorganization Plan No. 3 of 1961, 75 Stat. 837 (1961), 49 U.S.C. § 1324 (1964) ; CAB 
Delegation of Function to Hearing Examiners, 14 G.F.R. § 301.47 (1963). 

"'See Reorganization Plan No. 4 of 1961, 75 Stat. 837 (1961), 15 U.S.C. § 41 (1964) [Federal 
Trade Commission] ; Reorganization Plan No. 7 of 1961, 75 Stat. 840, 46 U.S.C. § 1111 (1964) 
[Federal Maritime Commission] ; cf. E. Gellhorn, The Treatment of Confidential Information by 
the Federal Trade Commission, 36 U. Chi. L. Rev. 113, 181-83 (1968). 

"* See Auerbach, Scope of Authority of Federal Administrative Agencies to Delegate Decision 
Making to Hearing Examiners, 48 Minn. L. Rev. 823, 853-69 (1964). 

®' Miller, The Vice of Selective Certification in the Appointment of Hearing Examiners, 20 Ad. 
L. Rev. 477, 485 (1968). 



REC. 6. DELEGATION OF DECISION MAKING 153 

desirability of Review Board procedures may regard the adjudica- 
tory burden as a necessary or useful one to bear in order to secure 
advantages that might be compromised under a Review Board 
system. This may be particularly true of agencies concerned with 
prompt disposition of certain classes of cases. Chairman McCuUoch 
of the National Labor Relations Board expressed concern to 
a congressional subcommittee in 1967 that mandatory imposition 
of a Review Board, by adding a level of internal review, "would 
unduly burden and delay the handling of election cases and nullify 
the Congressional intention to expedite the processing of such 
cases." ^^^ 

A similar conclusion could be reached by agencies whose mem- 
bers believe that constant exposure to actual records and the shift- 
ing factual patterns that litigation reveals, although it may be 
time-consuming and repetitive, serves an educational function. A 
succession of mine-run cases may hold hints of the emergence of 
new problems the significance of which the agency's staff may 
not be as likely to recognize. The members of the agency may 
therefore regard such exposure as essential to the proper per- 
formance of their policy-making duties. 

One might argue with many of these agency estimates. Some 
may understate the need for a Review Board; others may over- 
state the advantages of present arrangements. Agencies are as 
prone as other institutions to make the error, in de Tocqueville's 
precise phrase, of confusing the familiar with the necessary. 
Even if the estimates are arguable, however, their variety demon- 
strates that mandatory imposition of Review Board procedures on 
every agency would be an indiscriminate reform. "[N]o formula 
of reform can be applied across the board to all agencies," ^^ and it 
would be a serious mistake to enact legislation that seeks to require 
the creation of Review Boards wholesale, as it were, rather than 
retail. Legislation that lacks the support and sympathy of agencies, 
particularly if it seeks to control internal procedures, is not likely 
to succeed in any event. 

This does not mean that it would be inappropriate for Congress 
to enact enabling legislation authorizing federal administrative 
agencies to exercise their discretion to create Review Boards. To 
the contrary, such legislation would place the power of decision 
where it belongs. By allowing agencies to consider the establish- 
ment of Review Boards without the necessity of having to persuade 



°' Comments of Chairman Frank W. McCulloch, in Hearings on S. 518 Before the Subcomm. on 
Administrative Practice and Procedure of the Senate Comm. on the Judiciary, 90th Cong., Ist 
Sess. 223 (1967). 

»» Bernstein, Book Review, 81 Harv. L. Rev. 1886. 1887 (1968). 



154 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

Congress to grant the statutory authority to do so — indeed, by 

mooting the question whether statutory authority is necessary 

such legislation might stimulate experimentation with appellate 
review procedures. 

By enacting enabling legislation only, Congress runs the risk 
that it will not be implemented; the risk will extend to agencies 
where the desirability of Review Board procedures may seem the 
most clear. But the risk of inertia or bad judgment by some 
agencies seems preferable to the serious possibility that unwork- 
able, uncongenial procedures will be fastened on agencies that 
perhaps do not need or want them. It is wholly proper, if Congress 
believes it desirable, to require agencies to report from time to 
time whether they have elected to create a Review Board, and the 
reasons for their decisions.^oo In any event, the risk of non-imple- 
mentation is one that Congress can eliminate by enacting individ- 
ualized legislation for any agency about which it is specifically 
concerned. 

In framing enabling legislation. Congress should take care to 
preserve wide opportunity for agency choice of structure, juris- 
diction, and authority of Review Boards. It would be shortsighted 
to prescribe detailed procedures and requirements for Review 
Boards on the assumption that agencies that establish Review 
Boards will reflect different estimates of different needs in diffent 
agencies. Enabling legislation will be useful in the degree that it 
allows individual agencies the latitude to establish Review Boards 
that can truly be responsive to their distinctive needs, 



See Committee on Internal Organization and Procedure, Delegation of Final Decisional 
Authority, in Selected Reports of the Administrative Conference of the United States. S. Doc 
No. 24, 88th Cong., 1st Sess. 157, 163 (1963). 



REPORT IN SUPPORT OF DISCRETIONARY REVIEW OF 
DECISIONS OF PRESIDING OFFICERS; SUBPARA- 
GRAPH 1(b) OF RECOMMENDATION NO. 6 



Prepared by 
Emory N. Ellis, Jr. 
Executive Secretary 



I. Origin of Review 

At the meeting of the Council of the Administrative Confer- 
ence on November 11, 1968, the Committee on Agency Organiza- 
tion and Procedure proposed that the Conference consider amend- 
ing Section 8 of the Administrative Procedure Act (5 U.S.C. 557) 
so as to give the administrative agencies the authority to establish 
intermediate appellate boards to review formal proceedings. The 
proposal was supported by a lengthy written report of Professor 
James O. Freedman of the University of Pennsylvania Law School 
and the consultant to the Committee. Professor Freedman's paper 
was basically a study of the appeals board procedure at the Federal 
Communications Commission. While he noted that such a proce- 
dure was used in at least one other agency (the ICC) and while 
he referred to the type of discretionary review procedure in effect 
at the CAB, he did not analyze any but the FCC's experience. 

The Council considered the recommendation at its November 
11, 1968, meeting. The Council adopted the position that the pro- 
posal should recommend not only the use of appeal boards, where 
appropriate, but should give the agencies the alternative of select- 
ing the discretionary review procedure. The latter procedure had 
been recommended by the 1961-62 Conference, but had not been 
implemented. 

The Council's amendment was accepted by the Committee, and 
the proposal, as amended, was submitted to the Assembly at the 
plenary session in December 1968. The issue prompted consider- 
able discussion at the meeting. Finally, the Committee's proposal, 
as amended, was adopted as a recommendation of the permanent 
Conference. However, the Committee on Agency Organization 
and Procedure was requested to make a study of the discretionary 
review procedure as used at the CAB and to report the results 
to the Conference. 

155 



156 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

II. History and Application of CAB Rule 

Reorganization Plan No. 3 of 1961 ' authorized the Civil Aero- 
nautics Board "to delegate [subject to the strictures of the Ad- 
ministrative Procedure Act] any of its functions to a division of ' 
the Board, an individual Board member, a hearing examiner, or 
an employee or employee board . . ." The CAB could have chosen 
to set up an intermediate appeals board under this authority. It 
chose instead to adopt a discretionary review procedure similar 
to the certiorari procedure applicable in the Supreme Court of the 
United States. 

This procedure was first proposed by Notice of Proposed Rule- 
making PDR-8, September 12, 1961 =^ and was finally adopted 
with relatively minor amendments by procedural rule issuance 
PR-59 of January 23, 1962.^ 

Prior to adoption of the rule, the Board reviewed virtually all 
examiner's initial decision. Exceptions, if any, to the initial deci- 
sion were required to be filed 10 days after service thereof, * and 
the case would be reviewed as a matter of course.'^ The review in 
almost all instances involved all issues and all of the evidence 
which was before the examiner. While the rules provided that no 
objection could later be made in brief or oral argument with re- 
spect to an ultimate conclusion which was not expressly made the 
subject of an exception, it was a poor attorney indeed who could 
not couch his exceptions in broad enough terms to permit his full 
articipation in the matters before the Board." 

Except in the most insignificant cases, the Board review would 
involve the filing of briefs to the Board within a time specified, 
and an oral argument before the Board. 

PR-59 was intended to remedy this situation. Its essential parts 
were : 

(1) a delegation of authority, to the hearing examiner as- 

' 5 U.S.C. App. 

^ 26 F.R. 8642 

3 The rule, as originally proposed included a discretionary review procedure for air safety 
proceedings, which were then under the CAB's jurisdiction, as well as for economic proceedings. 
PR-58, January 23, 1962, made final the rules for air safety proceedings. The air safety functions 
of the CAB were transferred to the National Transportation Safety Board by the Transportation 
Act of 1966 49 U.S.C. §1654. We note that the NTSB does not now employ the same type 
procedure that applied to air safety proceedings at the CAB (see 14 CFR §421.41-421.47). 

* While the rules contained provisions for the form and content of exceptions specifying that 
they should not be lengthy or repetitive, and should relate only to ultimate conclusions, it was 
the practice of the CAB practitioners at the time to file a pre-brief in the guise of exceptions. 

^ Even in cases where no exceptions were filed and the Board agreed with the Examiner as to 
the merits, the Board would issue an opinion and order making the findings and drawing the 
conclusions necessary to support the decision. 

* The Board still uses the exception procedure in cases involving international matters subject 
to approval of the President under Section 801 of the Federal Aviation Act of 1958 49 U.S.C. 
§ 1461. See Rule 30 of the Board's Rules of Practice for this procedure (14 CFR § 302.30) 



REC. (5. DELEGATION OF DECISION MAKING 157 

signed to a particular case, of the Board's function of making 
the agency decision on the substantive and procedural issues 
remaining for disposition at the close of the hearing; ' 

(2) a provision that review of initial decisions is not a 
matter or right but of sound discretion of the Board ; '^ and 

(3) a provision specifying the grounds on which petitions 
for review may be filed.'' 

In short, the new procedure was intended to give the Board 
the flexibility to lighten its case load and expedite its proceedings 
by allowing an examiner's decision to become the final decision 
of the Board without further proceedings where it is well reasoned 
and based on the evidence of record or not controversial, and where 
review is warranted, by limiting issues on review to those which 
are really important and controversial. 

The process is a simple one. A party who desires review is re- 
quired to file a petition for discretionary review within 25 days 
after service of the initial decision in the case. The petition must 
allege one or more of the grounds for review specified in Rule 28 
(a) (2).^" Rule 28 calls for a clear concise statement of issues for 
review and for citations to the record in support of issues. ^^ 

Answers to petitions for review may be filed within 15 days 
after service of the petition. 

Exercise of the discretion to review requires the votes of 2 or 
more of the 5 Board members. In cases of great importance, the 
Board occasionally grants review even before petitions are filed. ^- 
However, the normal course is to await petitions and answers. 

Board action on the petitions for review is triggered by a memo- 
randum from the General Counsel to the Board summarizing the 
petitions for review and answers,^' and recommending a course of 



1 ' 14 CFR § 302.27. This section also provides that the examiners's initial decision shall become 
I effective as the final decision of the Board within 30 days after service if within that time no 
petitions for Board review have been filed, or the Board has not ordered review sua sponte. 
«14 CFR § 302.28(a) (1) 
•14 CFR § 302.28(a) (2) States that: 

"(2) Petitions for discretionary review shall be filed only upon one or more of the 
following: grounds: 

"(J) A finding of a material fact is erroneous; 

"(ii) A necessary legal conclusion is without governing precedent or is a departure 
from or contrary to law. Board rules, or precedent; 

"(iii) A substantial and important question of law, policy or discretion is involved; 
or 

"(iv) A prejudicial procedural error has occurred." 
*• Petitions for review may not exceed 20 pages. 

i> As was the case with exceptions, the Board does not enforce this requirement, and petitions 
for review have become pre-briefs. 

" In these cases, the exception procedure outlined above is usually invoked by the order taking 
review. 

" All Board members and their assistants receive copies of the petition and answers when they 
are filed. 



158 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

action. Ordinarily the course recommended falls into one of the 
following categories: (1) decline review and specify the date on 
^ ^'^ the examiner's decision is to become the decision of the 
ifoard; (2) accept review on all issues raised by petitions- (3) 
accept review as to some issues and decline review as to others 
In cases where review is recommended on some or all issues' 
the memorandum also includes a recommendation as to whether 
further procedural steps are required. In the great majority of 
cases, briefs to the Board and oral argument are ordered But 
occasionally the Board finds that the nature of the examiner's 
decision the status of the record, and the petitions for review are 
such that no further procedural steps are required. 

The General Counsel's memorandum dealing with petitions for 
review IS ordinarily acted upon by notation rather than calen- 
dared for discussion-that is, the recommendation is circulated to 
the Board members in their offices with an action target date 
stamped on it. The Member notes on the item whether he approves 
disapproves (with or without comment or amendments), or de- 
sires to have the item calendared for discussion. As stated above 
only two votes are required for review. 

Several days prior to the oral argument in a case in which 
review has been granted, the Office of the General Counsel submits 
a memorandum to the Board members summarizing the briefs of 
the parties to the Board.-' The memorandum contains no recom- 
mendations and in most cases is distributed directly to the 
Board members by the cognizant division of the Office of the 
General Counsel without the personal clearance of the General 
Counsel or his Deputy. 

After the oral argument, the Board deliberates and discusses 
the case m executive session; and, when decision has been reached, 
it instructs the appropriate opinion writers so that they may com- 
mence work on the opinion.^^ Internal target guidelines for com- 
pletion of the work are adopted, but these are not rigidly 
enforced. 

When the opinion is completed to the General Counsel's satis- 
faction, study copies are circulated to the Board members Each 
member re views the document, and, if he approves, he calls for 

whl^r*'"? *r ,':^'=°"«'d«'-^tion of a Board order declining review will be entertained only 

rilmnn f ° ' r" .'" ''^'■' ^""^ '^''^' '""^'""' '" P^^*' ^^^ '^'^ the rules require that the 

petition for reconsideration be limited to the single question of whether any issue designated 

Lde^endTnt;;." '"^^^^^^^'^ interrelated to an issue not designated that it cannot be review^ 
Je'^eceM^ ^''^' °^ *'°""^' """""^^^^ ^ ^^^ ^"^'•'J Members and their assistants when they 

of't?rrn'"'?"r""''r' ^'::,^"°'-"«y ^<J^'«°'-« ^'"PJoyed Principally in two operating divisions 
of the General Counsel s OfRce-the Routes Division and the Rules and Rates Division. 



REC. 6. DELEGATION OF DECISION MAKING 159 

the original opinion and order and affixes his signature and the 
date thereto. The opinion and order are released when the last 
member has signed.'" 

Approximately eight years have now elapsed since adoption of 
the discretionary review procedure by the CAB. The Board, its 
staff and its hearing examiners seem overwhelmingly to approve 
of the procedure. However, no attempt has been made, until now, 
to analyze the results in statistical form. Such an attempt follows. 

III. EFFECTIVENESS OF THE DISCRETIONARY REVIEW PROCEDURES 

AT THE CAB 

A. Background Material 

To obtain basic source material for this study, the Chairman 
of the Administrative Conference requested that the CAB compile 
and submit to the Conference, for comparison purposes, certain 
information related to time lapse between initial decision and 
final Board decision for cases during a representative period 
immediately preceding the effective date of the discretionary re- 
view procedure, and for all cases subject to the procedure decided 
after the effective date. In answering the request it was necessary 
for the CAB to sift through and submit information for 348 cases. 

The Board submitted the information requested for 145 cases ^^ 
subject to the old exception procedure in which the initial decision 
was issued subsequent to July 1, 1958,'" and for 203 cases to which 
the discretionary review procedure applied. 

For the cases using the old procedure the Board indicated by 
case, the date of the initial decision, the date of the Board order 
and opinion in which case was decided, the date of any order on 
petitions for reconsideration, a judgment as to the date on which 
the case was substantially decided, and the number of days elapsed 
between initial decision and final Board decision. 

The date for cases conducted under the discretionary review 
procedures included all of the same information, and, in addition, 
the date of the Board's order dealing with petitions for review, 
whether review was declined or granted, whether the issues on 
review were substantially the same or significantly more limited 



" Procedures for petition for reconsideration are then available to the parties. 14 CFR 
§ 302.37. 

" The cases used were only those to which the discretionary review procedure would have 
been applicable if it had been in effect during the period. Therefore, cases involving decisions 
which were subject to approval of the President were excluded. 

" Although the new procedure became effective on February 1, 1962, it was made inapplicable 
to proceedings in which the hearing had actually commenced on or before that effective date. 
Therefore, some of the cases included in those decided under the old procedures were actually 
decided well after the new procedures had become effective. 



160 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 



than those pending before the examiner, and whether further pro- 
cedural steps were ordered. 

On the basis of this information, it is possible to construct a 
fairly reliable statistical picture of the success of the review pro- 
cedure in expediting cases, by comparing the data before and 
after adoption of the rule. 

Caution is urged, however. While substantial time saving is 
indicated, all of it cannot be attributed to the advent of the dis- 
cretionary review procedure. The Board has taken several other 
steps in the direction of expediting formal proceedings since 1962. 
Among the most notable of these was the adoption of Subparts 
M & N of its Rules of Practice in Economic Proceedings.^" There 
has also been a general impetus since the middle 1960's to stream- 
line hearings and to speed up the decision of cases. It is difficult, 
if not impossible, to say what portion of the time savings realized 
are the direct result of the review procedure rather than the gen- 
eral program. However, it is the consensus at the Board that the 
review procedure has played a major role in the salutary results, 
and that it is entitled to a substantial part of the credit. 

B. The Results — Expedition 

The data submitted by the Board indicates that the cases tried 
under the old system took an average of 213 days between initial 
decision and final Board decision. ^^ Under the discretionary review 
procedures, the Board reviewed 97 of 203 cases, or 48 percent. 
The average case required 163 days between initial decision and 
final decision." This amounts to an average saving of 50 days per 
case, a significant improvement. But an even better indicator of 
the value of the rule can be found in the following table : 

TABLE A 

Before rule After rule 

Cases taking : Percent of Percent of 

Number total Number total 

^ (145 cases) (203 cases) 

100 days or less 40 27.58 108 53.20 

6 months or less 71 48.96 130 64.03 

1 year or less 124 85.51 179 88.17 

18 months or less 135 93.10 197 97.04 

20 14 C.F.R. § 302.1301-§ 302.1415. These Rules establish priorities for hearing in certain types 
of cases and very expedited procedures under which they are heard. 

^* Undoubtedly there are atypical cases included in both categories. No attempt has been made 
to extract these cases on the theory that the results are available for sufficiently representative 
periods under each category to make the effect of inclusion of these cases on the ultimate 
comparison negligible. 

^^ Cases in which review was granted, either in full or in part, averaged 281 days per case, 
while those in which review was denied averaged only 56 days per case. 



REC. 6. DELEGATION OF DECISION MAKING 



161 



After the rule the Board has been able to complete over half of 
the cases to which the Rule applies in 100 days or less and almost 
two-thirds in six months or less. Before the Rule only 28% of the 
same type of cases were concluded in 100 days and only 49% were 
concluded within six months. 

If we compare the days per case expended under the review 
rule by calendar year -^ with the overall average time expended of 
213 days for those cases to which the old procedures were appli- 
cable,'-' we can see that the significant time savings per case were 
not confined to the early period of the review rule's applicability, 
but have occurred in all except two of the years of the rule's 
existence.-'^ 

TABLE B 



Year 



After rule 
no. of cases 



After rule 
average days/case 
by calendar year 



Savings 



1962 (6 mos.) 

1963 

1964 

1965 

1966 

1967 

1968 

1969 (9 mos.) 



7 


48 


165 


20 


115 


98 


41 


195 


18 


34 


157 


56 


29 


168 


45 


32 


154 


59 


23 


108 


105 


14 


257 


44 



The following table breaks down time savings by the major 
classes of cases handled by the CAB. 

TABLE C 



Percent of 
Type of case Saving in Total cases cases where 

days/case after rule review 

declined 

Rate 149 18 61.11 

Enforcement 74 14 64.28 

Cert, and Licensing 34 136 47.79 

Control and merger* 22 26 61.53 

♦Acquisition of control and merger cases are not good comparative indicators of time savings 
because they have always received very expedited treatment by the Board, and, therefore, show 
the least improvement in elapsed time. 

'' For this purpose cases have been placed in calendar years by their date of final decision. 
" 1962 and 1969 should be excluded since the results reported included only 7 and 14 cases 
respectively for only a portion of each year. 
" See Section IV-A infra, for discussion of FCC experience. 



162 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

The reasons for the time savings under the new procedure are 
reasonably apparent from an analysis of the CAB statistics. In 
cases where the Board has declined review altogether, the average 
time lapse between initial decision and final decision has been 
56 days per case. This can be compared to the average of 281 days 
per case which has been the experience where review has been 
granted. The 56 day figure is even more impressive in light of the 
fact that under the old procedure ten days would have been allowed 
for exceptions, at least 30 days for briefs to the Board, and 
probably 10 to 15 more days before oral argument would be heard, 
depending on the shape of the Board's calendar. Added to this 
would be the time required even in simple cases to set up a 
Board meeting convenient to all Members at which the case 
could be discussed and instructions given. 

Where the Board has chosen to limit the issues on review there 
also appear to be significant time savings. There were 97 cases 
listed by the Board in which review was granted ; the issues were 
limited substantially in 35 of them. These cases took on the aver- 
age 82 days less between initial decision and final Board decision 
than the 62 cases in which the issues reviewed were essentially 
the same as those before the examiner. Along the same lines, the 
20 cases in which no additional procedural steps were ordered 
took 206 days less than the 77 in which briefs to the Board and 
oral argument were ordered. It should be pointed out that the 
cases in which full review is granted and all procedural steps are 
ordered included the most difficult and important ones which nor- 
mally take longer to decide than the simpler cases. 2*^ This detracts 
from the value of the results of the statistical exercise performed 
above. However, the fact that a procedure is available to make it 
unnecessary to use a cannon to kill flies is a very significant bene- 
fit in and of itself. 

A disturbing element in the process is that for the cases on 
which review is granted an average of 93 days per case elapse 
between initial decision and the order granting review. This rep- 
resents approximately 33% of the average time required between 
initial decision and final Board decision. Ways of reducing this 
time should be explored. One possiblility would be, in appropriate 
cases, oral presentation by the General Counsel to the Board of the 
matters raised on petitions for review. 

In summary, it would appear that substantial time savings 



^' Some analysis was performed to determine whether the devices permitting limiting of issues 
and procedural steps are being used to better advantage as time goes by and experience is 
deepened. It appears that this has not been the case. And the yearly use of these two devices 
does not show a trend to either more or less use of them. 



REC. 6. DELEGATION OF DECISION MAKING 163 

have resulted from the use of the discretionary review procedure, 
to the advantage of the litigants, the Board and the public. The 
litigants and the public benefit to the extent that it is relieved of 
the burden of focusing on certain issues, and, when it does decide 
to review a case, the focus is sharper. It is safe to say from the 
foregoing statistical analysis that the CAB rule has been an effec- 
tive tool for the CAB, one which could have similar value to some 
other agencies. 

IV. Comparison of Advantages of FCC Review Board 
Procedure with CAB Discretionary Review Procedures 

A. Introduction 

At the outset, it is to be realized that any comparison of CAB 
discretionary review procedures and the FCC Review Board 
must take into account the legislative history of the establishment 
of the latter Board. In contrast to the action permitting the CAB 
Reorganization Plan No. 3 to go into effect (see note 1, supra), 
the Congress rejected the President's Reorganization Plan No. 2 
for the FCC, after lengthy hearings,-' despite its similarity to the 
Plans submitted for other regulatory agencies (FTC, CAB, 
SEC). 

Instead, the Congress by statute effected precise reorganizations 
of FCC's structure and procedures by amendments of the Com- 
munications Act of 1934, as amended.-^ The pertinent amendment 
regarding delegation of review functions in adjudicatory cases, 
the continuing obligations of the Commission members to re- 
view such delegated actions, and the composition and qualifica- 
tions of what later came to be named as the Review Board were 
specifically laid out in the Act's amendments. ^^ 

Moreover, the hearings and the Committee's Reports indicated 
the "built-in" procedural "safeguards" upon which the Congress 
insisted, insofar as continued participation by Commissioners in 
the decisional process was concerned, as well as the initial limita- 
tions upon the Board's jurisdiction. These matters are treated at 
length in the Freedman Report. Further, it is clear from this legis- 
lative history that a principal, if not the main purpose of the 
statutory authorization for a review board was not so much a 
procedural device to avoid delays, as it was to permit the Com- 
missioners to devote a greater amount of their time to the consid- 



^' See Hearings Before the Committee on Government Operations, U.S. Senate, 87th Congress, 
S. Res. 142 (Plan No. 2), June 6 and 7, 1961. 
='Pub. L. 87-192, Aug. 31, 1961, 75 Stat. 420. 
"See Section 5(d). as amended— 47 U.S.C. 155. 



164 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

eration of fundamental policy matters arising out of the rapidly 
expanding technology and growth of the communications industry. 

Finally, though there is no attempt in this report to analyze 
the diifering statutory staff structures provided for by the Com- 
munications Act and the CAB statute, i.e., separation of functions 
provisions, the provision for a specific opinion vv^riting staff at 
the FCC Commissioners' level, the role and jurisdiction of the 
General Counsel in both agencies, it is to be noted that the com- 
parisons which follow must be considered, inter alia, in this light. 
Likewise, in any such comparison, consideration should be given 
not only to total workloads, but also the nature and variety of 
cases which come before the agency. For example, the FCC is one 
of the few regulatory agencies whose activities are possibly more 
subject to rapid and radical technological change than in almost 
any other area. Equally important is the fact that, unlike other 
regulatory agencies which are responsible for one industry or area 
of commerce, the FCC has a unique multifaceted responsibility for 
managing and regulating three basic industry and user groups — 
broadcast, common carrier and safety and special radio services. 
Because of the world-wide nature of communications, it must also 
function on an international basis. 

With the foregoing as background, the following analysis will 
attempt a comparison in those areas of commonality which may 
obtain in the use of adjudicatory review techniques. 

B. Expedition 

As demonstrated above it would appear that the CAB's review 
procedure results in significant time savings. These savings seem 
to have been spread out over the entire existence of the rule 
rather than restricted to any particular period. 

Professor Freedman has made an analysis similar to that made 
above, to show time savings resulting from the FCC use of an 
intermediate review Board.'"' He shows quite a large saving of 89 
days per case during the first 29 months of the Review Board's 
existence, but much less impressive figures during the last three 
years of his analysis." In fiscal 1965 the savings decreased to 33.5 
days per case. In fiscal 1966 there was an increase of 5.5 
days per case. And in 1967 the time saving was 17.5 days per 
case. 

Mr. Freedman explains the fluctuation in the average time 
requirements in recent years by citing increases in the Review 

30 Freedman Study, pp. 14 and 15. 



REC. (!. DELEGATION OF DECISION MAKING 165 

Board's jurisdiction and the need to increase the size of its staff. 
The resources used by the Review Board will be the subject of a 
discussion later herein. 

C. Time Savings to Aqevcy Members 

Both procedures undoubtedly save the members of the respec- 
tive agencies significant amounts of time that they would other- 
wise spend in consideration of formal proceedings. This is an 
extremely important factor in a climate of increasing activity at 
both agencies. 

As Professor Freedman's study shows the FCC granted peti- 
tions for review of Review Board decisions in only 23 of 175 ap- 
peals or 13 % of the cases. 

The results of the CAB's review procedure are not this impres- 
sive. The Board reviewed in whole or in part 97 of 203, or 48%, of 
the Examiner's initial decisions during the period for which re- 
ports were submitted. The ability to limit the issues on review 
and to control further procedural steps undoubtedly resulted in 
some savings as well. But it appears that the FCC has found the 
better method to limit its members' participation. 

Some of the credit for this result probably should go to the 
FCC member's ability to control the natural inclination to par- 
ticipate personally in decisions on the merits. This inclination 
must be controlled if either the FCC or CAB procedures are to be 
successful, and the faith that the FCC has in the five well-qualified 
members of its Review Board undoubtedly has contributed to the 
better results it has experienced in this regard. Nevertheless, the 
CAB shows a steady trend downward in the annual percentage of 
initial decisions reviewed, and it is hoped that the trend will con- 
tinue in the future. 

Moreover, it should be noted that in the 52% of the cases in 
which review is declined by the CAB, the case is ended quite soon 
after petitions for review and answers have been filed, after a 
minimum amount of involvement of staff. Board and party time. 
Therefore, at the CAB all share in the time savings. 



'* Professor Freedman also includes time savings for interlocutory matters at the FCC. As a 
general rule, after an examiner is assigned to a case at the CAB, he passes on all interlocutory 
matters (14 CFR § 302.18(a) and § 302.18(e)) and the CAB itself considers only those 
interlocutory matters dealing with significant changes in the scope of the proceeding. These are 
ordinarily terminated as of the time of the pre-hearing conference. Most other interlocutory 
matters are handled by the examiner under delegated authority, and may be appealed to the 
Board only with the consent of the examiner. (14 CFR § 302.18(e)). The examiners have been 
loath to permit interlocutory appeals. 



166 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

D. Quality of Decisions 

Professor Freedman makes the point that the Review Board 
procedure has resulted in more impartial, better conceived deci- 
sions, and better drawn opinions. He observes that Review Board 
members spend more time reading briefs and reviewing the record 
than Commission members and that they follow policy made by the 
Commission instead of making it. Therefore, they are better 
equipped to use the facts of a given case under policy established 
by the Commission to arrive at a fair and impartial decision. He 
contends that the Review Board's isolation from policy making 
functions is a protection against improper influence by outsiders, 
and against "hunch" decision making. 

These arguments would seem to apply as well to the CAB's 
discretionary review procedures. In the first place, at the FCC 
and the CAB, the ultimate power to decide the case rests with the 
members of the agency. If the members want to decide a case on 
the merits themselves, for any reason whatsoever, they have the 
power to do so, Review Board and discretionary review procedures 
notwithstanding. 

Secondly, if delegation of decision making authority to a five 
man Review Board is a solution to these problems mentioned by 
Professor Freedman, it would seem that delegation to a qualified 
impartial hearing examiner would serve the same purpose. The 
hearing examiner does not make policy, he follows it. He is the 
decision maker in the chain most familiar with the record and the 
contentions of the parties and he is isolated from improper 
influences to the same extent that Review Board members are. 
Therefore, following Professor Freedman's line of reasoning, 
the hearing examiner is in an excellent position to assume the 
responsibility of deciding any case he has heard. 

It is not disputed that the Review Board members at the FCC 
are eminently qualified for their positions,^- and that they 
have done their jobs well and to the obvious satisfaction of the 
Commission. 

By the same token, the consensus among CAB practitioners and 
at the CAB among the Board Members, the staff and the hearing 
examiners is that the responsibility vested in the hearing ex- 
aminer under the discretionary review procedure, has improved 
the quality of the examiner's work product, has improved the 



^ The 1961 Amendment to the Communications Act (Sec. 5(d)) set up the necessary 
qualifications for appointments of members of the Review Board in terms not unlike those for 
Hearing Examiners under the APA. The members nominated to the Board were approved by 
the Civil Service Commission, as was the grade classification for such positions (GS-17). 



REC. 6. DELEGATION OP DECISION MAKING 167 

prestige of Bureau of Hearing Examiners, and has enabled the 
Board to dispose of many cases without review. 

E. Elimination of a Procedural Step 

One of the principal advantages of the CAB's review procedure 
is that, in a number of cases, it permits the elimination of a pro- 
cedural step — that is, Board review on the merits. The FCC Re- 
view Board procedure eliminated that step also, but substitutes 
therefor Review Board consideration. Thus, even in cases where 
an examiner's decision may be well reasoned, supported by the 
evidence of record, and free from legal or factual error, the 
parties are granted Review Board review as a matter of right." 

Thus a major advantage of the CAB procedure is that it 
accomplishes its results without the necessity of setting up a sep- 
arate operating entity within the agency and allocating substan- 
tial funds to staff it.""* On the other hand, the FCC was required 
to commit substantial resources to the establishment of its Re- 
view Board. 

The Board itself is composed of five members, each of whom 
hold a GS-17 rank. The back-up professional staff consists of 
three GS-15's, one GS-14, and eleven attorneys in grades from 
GS-1 1 to GS-13. Eight clerical employees complete the staff. This 
amounts to an expenditure of something in the neighborhood of 
one half a million dollars in salaries alone. Of course all of this 
cannot be assessed as additional costs relating to the establish- 
ment of the Review Board. Even if the Review Board did not 
exist a number of the poeple employed by it would be used to 
perform similar tasks, such as opinion writing, within the agency. 
Nevertheless, the commitment of this number of people to Review 
Board activities alone is a sizeable undertaking which could make 
small agencies or agencies which have fewer hearing cases than 
the FCC reluctant to set up a Review Board. 

V. Conclusion 

Basically this paper reports on the results and advantages of 
the CAB's discretionary review procedure. No additional study 



" But see the discussion in the Introduction to Section IV, supra, regarding the statutory 
imposition for mandatory review in FCC cases. 

'■• This is not to say that the discretionary review procedure does not cost the CAB money. 
Members of the General Counsel's staff must be assigned to such tasks as analyzing Petitions for 
Review and preparing the memorandums to the Board recommending action of these petitions. 
However, these activities fit in well with the other functions of these attorneys, such as writing 
opinions, and dealing with informal matters, and they are not significantly different or more 
time consuming than tasks performed by the attorney advisors in the General Counsel's Office 
under the old review procedures. 



168 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

was made of the FCC's Review Board and there was no intention 
to disparage that process. The FCC believes that it has been a 
successful program for that agency and there is no reason to 
quarrel with its position. 

On the other hand the matters discussed above certainly show 
that the CAB procedure compares very favorably with the FCC's 
for the number and types of cases handled by the CAB. By use of 
discretionary review the Board has been able to expedite formal 
cases, save Board members' time, improve the quality of its 
hearing examiners and their decisions, and eliminate an unneces- 
sary procedural step in some instances. It has accomplished this 
without the expenditure of substantial funds. 

The discretionary review procedure used at the Civil Aeronau- 
tics Board is well worth serious consideration by other administra- 
tive agencies. 



RECOMMENDATION NO. 7 

ELIMINATION OF JURISDICTIONAL AMOUNT REQUIRE- 
MENT IN JUDICIAL REVIEW 



RECOMMENDATION 

Title 28 of the United States Code should be amended to elimi- 
nate any requirement of a minimum jurisdictional amount before 
U.S. district courts may exercise original jurisdiction over any 
action in which the plaintiff alleges that he has been injured or 
threatened with injury by an officer or employee of the United 
States or any agency thereof, acting under color of Federal law. 
This amendment is not to affect other limitations on the availabil- 
ity or scope of judicial review of Federal administrative action. 



169 



REPORT OF THE COMMITTEE ON JUDICIAL REVIEW 
IN SUPPORT OF RECOMMENDATION NO. 7 



Prepared by 

Roger C. Cramton 

Professor of Law 

University of Michigan 



An anomaly in the law relating to federal-court jurisdiction 
deprives a United States district court, otherwise competent, to 
entertain certain cases involving "nonstatutory" review of fed- 
eral administrative action in the absence of the jurisdictional- 
amount requirement of 28 U.S.C. § 1331 (1964) (the general 
"federal question" provision). These cases "arise under" the fed- 
eral Constitution or federal statutes and — unless barred by the 
doctrine of sovereign immunity and subject to the various limit- 
ing rules of standing, exhaustion of remedies, finality, ripeness, 
and so on — they are appropriate matters for the exercise of fed- 
eral judicial power. The purpose of this recommendation, as it 
plainly states, is to correct this anomaly by conferring original 
jurisdiction on district courts of "any action in which the plaintiff 
alleges that he has been injured or threatened with injury by an 
officer or employee of the United States or any agency thereof, 
acting under color of federal law," 

Nonstatutory review of federal administrative action has re- 
cently been summarized by Professor Byse : 

The litigant who seeks judicial review of a federal administrative de- 
termination must, of course, bring his action in a court which Congress 
has authorized to hear the controversy. If the petitioner can show that 
he is "aggrieved" or "adversely affected" by an "order" of one of the 
major regulatory agencies, the jurisdictional hurdle will easily be sur- 
mounted, for most regulatory statutes specifically authorize such persons 
to secure judical review in a named court or courts. If the statute from 
which the agency derives its powers does not contain a specific review 
provision, the necessary congressional authorization may appear in an- 
other statute, such as the Review Act of 1950 [5 U.S.C. § 1031-42 
(1964)], or, possibly, section 10 of the Administrative Procedure Act [5 
U.S.C. §§701-06 (Supp. II, 1967)]. Whether an action for review is 
brought pursuant to a specific or general statutory review provision, the 
theory is the same: Congress has directed the judiciary to review the ad- 

170 



REC. 7. JURISDICTIONAL AMOUNT 171 

ministrative determination ; so long as the statute does not transgress 
constitutional limitation, it is the court's duty to comply with the con- 
gressional directive. 

If the litigant is unable to ground his action on either a specific or a 
general statutory review provision, judicial relief is not necessarily fore- 
closed, for he may still be able to institute a "nonstatutory" review 
action. . . . 

The litigant who seeks review under this theory will institute an ac- 
tion in a federal district court against the individual whose action or in- 
action as a government official allegedly invades his legal rights. The 
remedy usually sought is an injunction, often accompanied by a request 
for relief under the Declaratory Judgment Act [28 U.S.C. §§ 2201-02 
(1964)]. More often, the nonstatutory review action is based upon a 
jurisdictional provision enacted as part of a substantive statute, such as 
section 279 of the Immigration and Nationality Act of 1952, which states 
that district courts shall have jurisdiction of "all cases, civil and crimi- 
nal, arising under any provision of this title." [8 U.S.C. § 1329 (1964)]. 
More often, the nonstatutory review action is based upon a 
jurisdictional section of title 28 of the United States Code, such as sec- 
tion 1331, the general "federal question" jurisdictional grant (which is 
subject to the requirement of the $10,000 jurisdictional amount) or sec- 
tions 1337 and 1339, which confer "original jurisdiction" without regard 
to jurisdictional amount on the district courts of any civil action "arising 
under" any act of Congress "regrulating commerce" or "relating to the 
postal service." 

Byse & Fiocca, Section 1361 of the Mandamus and Venue Act 
of 1962 and "NoTistatutory" Judicial Review of Federal Adminis- 
trative Action, 81 Harv. L. Rev. 308, 321-23 (1967) [footnotes 
omitted] . 

Under present law tliere are a significant number of situations 
involving "nonstatutory" review in which a plaintiff must ground 
his action on the "general federal question" section of the Judicial 
Code, 28 U.S.C. § 1331, and must be prepared to establish not 
only that the action arises under the Constitution, laws or treaties 
of the United States but also that "the matter in controversy 
exceeds the sum or value of $10,000, exclusive of interests and 
costs." In some of these cases the jurisdictional-amount require- 
ment cannot be met because it is impossible to place a mone- 
tary value on the right asserted by the plaintiff. How is one to 
value an individual's claim that he is entitled to remain free from 
military service, to travel abroad, or to remain free from con- 
tinuous police surveillance? In other cases the plaintiff's claim 
that he is entitled to a federal grant or benefit (e.g., federal em- 
ployment, use of public lands) may be assigned a monetary value, 
but the amount in controversy may be $10,000 or less. Judicial 
review of these and similar claims may be unavailable or limited 
in scope for other reasons, but judicial consideration of the plain- 



172 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

tiff's claim should not be foreclosed solely because of lack of juris- 
dictional amount. 

The problem is illustrated by the recent case of Boyd v. Clark, 
287 F. Supp. 561 (S.D.N. J., 1968), in which four Selective Serv- 
ice registrants challenged the constitutionality of college-student 
deferments provided by the Military Selective Service Act of 1967, 
50 U.S.C. § 456(h) (1) (Supp. 1967), on the ground that student 
deferments arbitrarily discriminate against persons who are eco- 
nomically unable to attend college. The three-judge district court, 
in an opinion by Judge Hays, granted the government's motion to 
dismiss for lack of jurisdictional amount : 

. . . The injury claimed is an increased likelihood of induction, be- 
cause, so the plaintiffs allege, registrants who are deferred as students 
thereby ordinarily postpone their induction for several years and in 
many cases escape service entirely by acquiring other deferments. . . . 

. . . Jurisdiction of this suit is claimed under 28 U.S.C. § 1331, the 
general federal question statute, which requires that "the matter in con- 
troversy" exceed "the sum or value of $10,000." Plaintiffs' counsel 
concedes that he cannot prove that any of the plaintiffs will suffer a 
monetary loss of more than $10,000 by reason of the injury alleged. 

It is firmly settled law that cases involving rights not capable of valu- 
ation in money may not be heard in federal courts where the applicable 
jurisdictional statute requires that the matter in controversy exceed a 
certain number of dollars. The rule was laid down in Barry v. Mercein, 
46 U.S. (5 How.) 103 (1847), a child custody case. The "right to the cus- 
tody, care, and society" of a child, the court noted, "is evidently utterly 
incapable of being reduced to any pecuniary standard of value, at it rises 
superior to money considerations." 46 U.S. at 120. Since the statute per- 
mitted appeals only in those cases where the "matter in dispute exceeds 
the sum or value of two thousand dollars," the court concluded that it 
was without jurisdiction: "The words of the act of Congress are plain 
and unambiguous. . . . There are no words in the law, which by any just 
interpretation can be held to . . . authorize us to take cognizance of 
cases to which no test of money value can be applied." 46 U.S. at 120. 
Subsequent decisions have followed this reasoning. See Kurtz v. Moffitt, 
115 U.S. 487, 498 (1885) ; Youngstown Bank v. Hughes, 106 U.S. 523 
(1882) ; Giancana v. Johnson, 335 F.2d 366 (7th Cir. 1964), cert, denied, 
379 U.S. 1001 (1965) ; Carroll v. Somervell, 116 F.2d 918 (2d Cir. 1941) ; 
United States ex rel. Curtiss v. Haviland, 297 Fed. 431 (2d Cir. 1924) ; 1 
Moore, Federal Practice § 0.92 [5] (2d ed. 1964). 

Judge Edelstein dissented, arguing that the plaintiffs' allegation 
that the matter in controversy exceeded $10,000 should not be 
scrutinized, at least where the defendant did not move to dismiss 
on that ground, or, alternatively, that the court should "assume 
that freedom from an unconstitutional discrimination exceeds the 
sum or value of $10,000." He suggested that the jurisdictional- 
amount requirement was an unconstitutional one in situations, 



REC. 7. JURISDICTIONAL AMOUNT 173 

such as this, in which the action, because it is against federal 
officers, could not be brought in a state court. 

The reasons for objecting to the absence of federal jurisdic- 
tion in a case like Boyd v. Clark are readily apparent. The factors 
relevant to the question of whether or not a federal court should 
be available to a litigant seeking protection of a federal right have 
little, if any, correlation with minimum jurisdictional amount. 
Instead they involve such considerations as whether there is a 
need for a specialized federal tribunal and whether there are de- 
fects in the state judicial system that might substantially impair 
consideraton of the plaintiff's claim. These factors have special 
force in the type of cases with which this recommendation is 
concerned — where specific relief is sought against a federal officer 
— because state courts generally are powerless to restrain or man- 
damus the action of a federal officer taken under color of federal 
law. See Arnold, The Power of State Courts To Enjoin Federal 
Officers, 73 Yale L.J. 1385 (1964). Unlike other federal-question 
cases subject to the jurisdictional-amount requirement, such as 
cases attacking state statutes on federal constitutional grounds, 
denial of a federal forum for lack of jurisdictional amount may 
be a denial of any remedy whatsoever. As Judge Edelstein pointed 
out in his dissent in Boyd v. Clark, jurisdictional provisions which 
deny a litigant any opportunity to present federal constitutional 
claims may themselves present constitutional difficulties. 

The lack of a state forum in actions against federal officers 
serves to distinguish this recommendation from other and more 
general proposals to eliminate the jurisdictional-amount require- 
ment in federal-question cases. The American Law Institute, for 
example, has tentatively recommended that the jurisdictional 
amount requirement be abandoned in federal question cases. ALI, 
Study of the Division of Jurisdiction Between State and Federal 
Courts § 1311 and commentary at 172-76 (1969). Whether or not 
these broader proposals are accepted, the narrower problem with 
which this recommendation is concerned needs correction. 

It is unclear why Congress, when it increased the jurisdictional 
amount in diversity-of-citizenship cases in 1958 from $3,000 to 
$10,000, also raised the minimum jurisdictional amount in feder- 
al question cases arising under 28 U.S.C. § 1331. The legislative 
history merely asserts that the effect of the change is insignificant 
because the only cases affected are those involving the constitu- 
tionality of state statutes and those arising under the Jones Act. 
Virtually all other cases were said to fall within one of the special 
federal question statutes which require no minimum jurisdictional 



174 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

amount. See, e.g., 104 Cong. Rec. 11508 (June 30, 1958). If this 
were the case it is difficult to see why the provision was enacted, 
since the only purpose of increasing the jurisdictional amount was 
to reduce the workload of the federal courts, a purpose which 
would not be advanced if federal-question cases were unaffected. 
See Friedenthal, Neiv Limitations on Federal Jurisdiction, 11 Stan. 
L. Rev. 213, 216-18 (1959). 

The assertion, however, that the significant cases which arise 
under section 1331 are limited to the two categories mentioned 
is misleading and erroneous. There is an important third cate- 
gory, with which this recommendation is concerned, in which 
persons aggrieved by federal administrative action are seeking 
nonstatutory review in an action brought against the officer. In 
these cases the plaintiff must follow one of the following courses : 
(1) satisfy the minimum jurisdictional amount required by 28 
U.S.C. § 1331; (2) bring his action in the District of Columbia; 
(3) cast his action in the form of a mandamus proceeding, thus 
qualifying under the provisions of the Mandamus and Venue Act 
of 1962, 28 U.S.C. §§1361, 1391(e) (1964); or (4) persuade 
the court that section 10 of the Administrative Procedure Act, 
5 U.S.C. §§701-04 (Supp. II, 1967), provides an independent 
jurisdictional basis for judicial review of federal administrative 
action, a proposition that is much in doubt. Brief consideration 
will be given to the unsatisfactory nature of each of these alter- 
natives. 

1. Satisfying the minimum jurisdictional amount. The prin- 
ciples for determining whether the amount in controversy satis- 
fies statutory requirements are well-established. The plaintiff has 
the burden of alleging and proving jurisdictional facts. The 
plaintiff's ad damnum is ordinarily taken at face value unless it 
appears not to have been made in good faith or the court believes 
as a matter of legal certainty that the value of the right in con- 
troversy is less than the minimum amount. St. Paul Mercury 
Indem. Co. v. Red Cab Co., 303 U.S. 283, 288-89 (1938). There 
is no guarantee, however, that the court will not examine in de- 
tail the value of the plaintiflF's claim. In Carroll v. Somervell, 
116 F.2d 918 (2d Cir. 1941), for example, where a federal em- 
ployee sought to enjoin his dismissal for failure to sign a non- 
Communist affidavit, the employee alleged loss of standing in the 
community in excess of $3,000. Nevertheless, the case was dis- 
missed for lack of jurisdictional amount on the ground that the 
value of the claim was measured by the maximum compensa- 



REC. 7. JURISDICTIONAL AMOUNT 175 

tion — less than $3,000 — that the employee would be entitled to 
receive during the ensuing year. 

As the Carroll case indicates, the methods of valuation in in- 
junction suits are conservative. In McNutt v. General Motors 
Acceptance Corp., 298 U.S. 178 (1936), it was held that in an 
attack on a regulatory statute the amount in controversy is not 
the value of the business or other activity regulated but the dif- 
ference between its value regulated and unregulated. See also 
Healy v. Ratta, 292 U.S. 263 (1934) (the amount in controversy 
in tax litigation is measured by the amount of the tax rather 
than of the penalty). Although some cases ignore these princi- 
ples by treating the plaintiff's ad damnum as conclusive, e.g., 
Flast V. Cohen, 392 U.S. 83 (1968) (federal taxpayer's attack 
on federal grants to religious schools) ; Townsend v. Zimmer- 
man, 237 F.2d 376 (6th Cir. 1956) (attack on selective service 
classification), a plaintiff seeking judicial review of federal ad- 
ministrative action cannot rely on this approach being taken. 

Although many nonstatutory review actions can be based upon 
special jurisdictional provisions such as 28 U.S.C. § 1337 (aris- 
ing under acts "regulating commerce"), there is a significant 
residue in which jurisdiction must be predicated upon § 1331, the 
general federal question provision which requires a jurisdictional 
amount in excess of $10,000. Cases against federal officers in 
which the jurisdictional-amount requirement was in issue are 
listed below. 

Reputational or intangible interests that cannot be expressed in money 
terms: Oesterreich v. Selective Service System Local Board No. 11, 280 
F.Supp. 78 (D. Wyo. 1968), aff'd, 390 F.2d 100 (10th Cir. 1968), cert, 
granted, 391 U.S. 912 (freedom from induction resulting from selective 
service reclassification) ; Giancana v. Johnson, 335 F.2d 366 (7th Cir. 
1964), cert, den., 379 U.S. 1001 ("Courts may not treat as a mere techni- 
cality the jurisdictional amount essential to the 'federal question' juris- 
diction, even in this case where there is an allegedly unwarranted inva- 
sion of plaintiff's privacy [by continuous FBI surveillance]") ; Jackson 
v. Kuhn, 254 F.2d 555 (8th Cir. 1958) (constitutionality of military pres- 
ence at Little Rock High School; jurisdictional-amount requirement held 
not satisfied) ; Vorachek v. United States, 337 F.2d 797 (8th Cir. 1964) 
(disclosure of confidential information concerning plaintiff by federal 
officers). 

Employment interests: Neustein v. Mitchell, 130 F.2d 197 (2d Cir. 
1942) (loss of state office because of federal enforcement of Hatch Act 
prohibitions on political activity) ; Carroll v. Somervell, 116 F.2d 918 (2d 
Cir. 1941) (value of federal employment measured by lost wages) ; Fis- 
chler V. McCarthy, 117 F.Supp. 643 (S.D.N.Y. 1954), aff'd on other 
grounds, 218 F.2d 164 (2d Cir. 1954) (bare allegation that value of fed- 
eral employment exceeded $3,000 not accepted). Cf. Friedman v. Interna- 



176 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

tional Ass'n of Machinists, 220 F.2d 808 (D.C.Cir. 1955) (value of mem- 
ber's explusion from union measured by loss of wages) . One line of cases 
that formerly were troubled by the jurisdictional-amount requirement in- 
volved the preferential employment rights of veterans. See Christner v. 
Poudre Valley Co-op. Ass'n, 134 F.Supp. 115 (D.Colo. 1955), aff'd, 235 
F.2d 946 (10th Cir. 1956). This particular problem has now been cured 
by a statute specifically providing for federal jurisdiction in such cases 
without regard to jurisdictional amount. 

Freedom from regulatory interference: Quinault Tribe of Indians v. 
Gallagher, 368 F.2d 648 (9th Cir. 1966) (freedom of Indian reservation 
from state civil and criminal authority) ; Gavica v. Donaugh, 93 F.2d 173 
(9th Cir. 1937) (enforcement of regulations governing grazing on public 
lands) ; Dewar v. Brooks, 16 F.Supp. 636 (D.Nev. 1963) (same) ; Wyo- 
ming V. Franke, 58 F.Supp. 890 (D.Wyo. 1945) (creation of national 
monument). Cf. Empresa Hondurena de Vapores, S.A. v. McLeod, 300 
F.2d 222, (2d Cir. 1962) (employer's suit to enjoin NLRB regional direc- 
tor from conducting a representation election). 

Property rights: Cameron v. United States, 146 U.S. 533 (1892) ("It 
is not, however, the value of the property in dispute in this case which is 
involved, but the value of the color of title to this property, which is 
hardly capable of pecuniary estimation, and if it were, there is no evi- 
dence of such value in this case") ; Helvy v. Webb, 36 F.Supp. 243 (S.D. 
Calif. 1941) (value of grazing lands) . 

Military status: Jones, Jurisdiction of the Federal Courts to Review 
the Character of Military Administrative Discharges, 57 Colum. L. Rev. 
917, 937-41 (1957) : ". . . the jurisdictional amount may prove an insur- 
mountable obstacle since the plaintiff-veteran [in military discharge sit- 
uations] probably would not be able to establish that the requisite 
$3,000 is involved in the controversy over the character of his discharge, 
a matter as to which he has the burden of proof." See also Meador, Judi- 
cial Determinations of Military Status, 72 Yale L. J. 1293, 1298 n. 27 
(1963). 

2. Litigating in the District of Columbia. The district court 
for the District of Columbia has long been viewed as inheriting 
the inherent and common-law powers of the Maryland courts. 
Prior to 1962 this meant that, alone of federal courts, those in 
the District of Columbia possessed the power to issue original 
writs of mandamus as a general matter. The mandamus problem 
was taken care of by the Mandamus and Venue Act of 1962, 28 
U.S.C §§1361, 1391(e), which conferred power on district 
courts everywhere to entertain "any action in the nature of man- 
damus to compel an officer or employee of the United States or 
any agency thereof to perform a duty owed to the plaintiff." In 
addition to its mandamus power, however, the district court for 
the District of Columbia also "has a general equity jurisdiction," 
Sta/rk V. Wickard, 321 U.S. 288, 290 (1944), which it may exer- 
cise without regard to the amount in controversy. D.C. Code 
Ann. §§ 11-521, 11-961, 11-962 (Supp. IV, 1965). 



REC. 7. JURISDICTIONAL AMOUNT 177 

The resulting situation is hardly a logical or defensible one. 
Congress, disturbed by the inability of litigants to obtain man- 
damus relief in local courts distributed around the country, con- 
ferred such jurisdiction on all district courts, without regard to 
amount in controversy, in 1962. The more traditional exercise 
of injunctive or declaratory authority, however, remained sub- 
ject to the requirement of minimum jurisdictional amount when- 
ever no special federal question statute was available — except in 
the District of Columbia! The same arguments that supported 
the Mandamus and Venue Act of 1962 — the expense and incon- 
venience of forcing litigants from all over the country to bring 
their claims to a District of Columbia court — support the elimi- 
nation of the remaining anachronism with respect to jurisdic- 
tional amount in injunction suits against federal officers. 

3. Relief "in the nature of mandamus." As has already been 
indicated, the Mandamus and Venue Act of 1962, 28 U.S.C. 
§§ 1361, 1391(e), was intended to provide litigants with a con- 
venient local forum in actions to require a federal officer to per- 
form a duty owed to the plaintiff. No jurisdictional amount is 
required in actions coming within 28 U.S.C. § 1361. In situations 
where the federal officer does not "owe a duty" to the plaintiff 
but has unlawfully interfered with the plaintiff's rights — the 
traditional situation giving rise to injunctive relief — § 1361 
cannot provide the basis for federal jurisdiction. Moreover, since 
an action under § 1361 is "in the nature of mandamus," there 
is a risk that the court will hold that a negative decree cannot 
be issued or that the ministerial-discretionary distinction and 
other technicalities of mandamus law will significantly narrow 
the scope of review. These problems are ably discussed by Byse 
& Fiocca, Section 1361 of the Mandamus and Venue Act of 1962 
and "Nonstatutory" Judicial Review of Federal Administrative 
Action, 81 Harv. L. Rev. 308 (1967), who conclude that the 
present existence of the mandamus remedy does not take care of 
all of the troublesome limitations on the availability of non- 
statutory review. 

4. Section 10 of the Administrative Procedure Act as an in- 
dependent source of federal jurisdiction. Section 10 of the Ad- 
ministrative Procedure Act provides, subject to some qualifica- 
tions, that "a person suffering legal wrong because of agency 
action ... is entitled to judicial review thereof" and that "final 
agency action for which there is no other adequate remedy in a 
court is subject to judicial review." 5 U.S.C. §§ 701-03 (Supp. 
II, 1967). It also provides that "[t]he form of proceeding for 



178 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

judicial review" may be brought "in a court of competent juris- 
diction." Although the section does not in terms confer jurisdic- 
tion on federal courts and was generally viewed as restating the 
existing law of judicial review, some courts in more recent years 
have concluded that section 10 is an independent grant of juris- 
diction to review "final agency action." Brennan v. Udall, 379 
F.2d 803 (10 Cir. 1967) (Interior determination which ad- 
versely affected landowner's title) ; Coleman v. United States, 
363 F.2d 190 (9th Cir. 1966), adhered to on rehearing, 379 F.2d 
555 (1967) (Interior determination concerning the validity of a 
mining claim) ; Cappadora v. Celebrezze, 356 F.2d 1 (2d Cir. 
1966) (refusal of Social Security Administrative to reopen claim 
for survivors' benefits) (alternative holding) ; Estrada v. Ahrens, 
296 F.2d 690 (5th Cir. 1961) (Immigration and Naturalization 
Service action excluding an alien from entry). It is not clear 
that the jurisdiction of the district court needed to be rested on 
section 10 of the Administrative Procedure Act in any of these 
cases: special federal-question provisions existed in Cappadora 
and Estrada; and it is probable that the minimum jurisdictional 
amount under §§ 1331 could have been satisfied in Brennan and 
Coleman. None of the cases contains an extensive or reasoned 
discussion of the question whether section 10 is in fact an in- 
dependent ground of subject-matter jurisdiction in federal courts. 
A number of cases have reached the conclusion that the Ad- 
ministrative Procedure Act is not a source of jurisdiction: Twin 
Cities Chippewa Tribal Council v. Minnesota Chippewa Tribe, 
370 F.2d 529 (8th Cir. 1967) (attack on manner of holding 
tribal election) ; Chournos v. United States, 335 F.2d 918 (10th 
Cir. 1964) (Interior determination concerning the validity of 
placer mining claim) ; Local 54-2, Operating Engineers v. NLRB, 
328 F. 2d 850 (3d Cir. 1964) (NLRB refusal to hold representa- 
tion election) ; Ove Gustavsson Contracting Co. v. Floete, 278 
F. 2d 912 (2d Cir. 1960) (termination of government contract) ; 
Kansas Citij Power & Light Co. v. McKay, 225 F.2d 924 (D.C. 
Cir, 1955) (federally-supported power program). These decisions 
are no more satisfactory than those going the other way. The 
Chippewa case merely states a conclusion that section 10 "does 
not confer jurisdiction upon federal courts. Its purpose is to de- 
fine the procedures and manner of judicial review of agency 
action rather than confer jurisdiction." Chournos really involves 
the separate problem of whether section 10 waives sovereign im- 
munity, while the Kansas City Power case involves standing and 
not subject-matter jurisdiction. The other two cases appear to be 



REC. 7. JURISDICTIONAL AMOUNT 179 

correctly decided on other grounds : nonstatutory review of 
NLRB matters under the doctrine of Leedom v. Kyne, 358 U.S. 
184 (1958), takes place in district courts rather than, as was 
urged in the Local 5^2 case, in a court of appeals; and district 
court jurisdiction of claims arising out of government contracts, 
the matter at issue in Ove Gustavsson, is precluded because of 
the existence of an adequate statutory remedy. 

The Supreme Court has not yet spoken on the question, de- 
spite the conflict of circuits, although in Rusk v. Cort, 369 U.S. 
367, 371-72 (1962) (passport issuance), the Court appears to 
have assumed that section 10 is a grant of jurisdiction. Thus the 
question remains an open one. 

If the Supreme Court were to hold that section 10 of the Ad- 
ministrative Procedure Act is an independent ground of federal 
jurisdiction, that holding would go far to ameliorate the problems 
with which this recommendation is concerned. Cases seeking ju- 
dicial review of federal administrative action would be enter- 
tained by federal courts without regard to jurisdictional amount, 
except in those situations exempt from the Administrative Pro- 
cedure Act or included within the qualifying phrase of section 
10: "except to the extent that — (1) statutes preclude judicial 
review; or (2) agency action is committed to agency discretion 
by law. . . ." 

The Committee on Judicial Review, believing that it is not 
its function to interpret federal statutes, takes no position on 
whether section 10 now provides for federal jurisdiction in cases 
involving final action of federal ofl^cers or agencies. The Commit- 
tee merely states a conclusion of policy — there should be no 
jurisdictional-amount limitation on suits against federal officers 
seeking injunctive and declaratory relief. Since it is at least 
doubtful whether this objective can be reached by interpretation 
of existing legislation, the Committee urges enactment of specific 
legislation to handle the problem. 

It should be noted again that the grant of subject-matter 
jurisdiction without regard to jurisdictional amount would not 
impair the doctrine of sovereign immunity or affect any of the 
other rules and doctrines that limit the availability and scope 
of judicial review of official action: (1) the plaintifl^'s lack of 
standing; (2) the absence of a matured controversy; (3) the 
availability of an alternative remedy in another court; (4) the 
express or implied preclusion of judicial review; (5) the commis- 
sion of the matter by law to the defendant's discretion; (6) the 
privileged nature of the defendant's conduct; (7) the plaintiff's 



180 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

failure to exhaust his administrative remedies; and (8) the dis- 
cretionary authority of a court to refuse relief on equitable 
grounds. 



RECOMMENDATION NO. 8 

JUDICIAL REVIEW OF INTERSTATE COMMERCE 
COMMISSION ORDERS 



RECOMMENDATION 

Judicial review of orders of the Interstate Commerce Commis- 
sion in cases where at present a special three-judge District 
court is used under 28 U.S.C. 2325 should be by petition to re- 
view in the U.S. Courts of Appeals in the same general manner 
as review of agency orders under the Judicial Review Act of 1950, 
28 U.S.C. (Supp. II, 1967) 2341-2352. 



181 



REPORT OF THE COMMITTEE ON JUDICIAL REVIEW 
IN SUPPORT OF RECOMMENDATION NO. 8 



For historical reasons, procedures for review of orders of the 
Interstate Commerce Commission differ from the usual patterns 
which have developed governing judicial review of administra- 
tive action. Since 1903 orders of the Commission (other than 
those involving only the payment of money) have been reviewed 
by three-judge district courts specially constituted under author- 
ity of 28 U.S.C. 1336, 2284, and 2325. The decisions of these 
courts may be taken to the Supreme Court by direct appeal 
rather than by petition for certiorari. 

The 1961-62 Administrative Conference of the United States 
considered the question fully and concluded that the reasons for 
conforming procedures for review of these orders to accepted 
concepts of judicial review far outweigh the reasons for per- 
petuating present procedures. In particular, substitution of the 
court of appeals for three-judge district courts and elimination 
of direct appeals to the Supreme Court would reduce the heavy 
strain on judicial resources imposed by the convening of three- 
judge district courts and lighten the docket of the Supreme 
Court. Recommendation 3 of the 1961-62 Administrative Con- 
ference proposed the elimination of the use of special three- judge 
district courts for review of these ICC orders and the substitu- 
tion of review in courts of appeals as is generally the case with 
orders of other Federal regulatory agencies. Recommendation 4 
proposed further procedures for improving judicial review of ICC 
orders, all of which were designed to increase efficiency and save 
time, effort, and expense in appellate procedures. 

Identical bills incorporating the substance of Recommenda- 
tions 3 and 4 were introduced in the 90th Congress, Second Ses- 
sion as S. 2687 and H.R. 13927. S. 2687 was passed by the Senate, 
n4 Cong. Rec. SI 0282 (Sept. 5, 1968), but no action was taken 
in the House of Representatives. It appears likely that the bills 
will be reintroduced in the next session of Congress. 

The reasons that supported Recommendations 3 and 4 remain 
as valid today as they were six years ago. A detailed statement 
of those reasons is contained in the reports submitted by the 
Committee on Judicial Review to the previous Administrative 

182 



REC. 8. REVIEW OF ICC ORDERS 183 

Conference in support of Recommendations 3 and 4, attached 
hereto as Appendix I. We urge the reaffirmation of these 
recommendations. 



APPENDIX A 
1961 RECOMMENDATIONS 3 AND 4 WITH SUPPORTING REPORT 

RECOMMENDATION NO. 3 

It Is Recommended That — 

(1) review of Interstate Commerce Commission orders should be upon ap- 
peals to the United States Courts of Appeals in all cases where at present a 
special three-judge court is used; district courts should be relieved of their 
jurisdiction of such cases under 28 U.S.C. 1336, and the courts of appeals 
should have exclusive jurisdiction to review these orders of the Commission; 

(2) final review of orders of the Interstate Commerce Commission by the 
Supreme Court of the United States should be only by petition for a writ of 
certiorari; 

(3) review of Interstate Commerce Commission orders should be permitted 
in any judicial circuit wherein is the residence or principal office of the party 
or any of the parties filing the request for review. 

RECOMMENDATION NO. 4 

It Is Recom.me7ided That — 

Procedures for judicial review of orders of the Interstate Commerce Com- 
mission by courts of appeals should incorporate the following features: 

(1) A limit of 60 days should be imposed as the time within which a peti- 
tion for review must be filed in any case for which the present statutory 
provisions do not fix a period for filing petitions for review, such 60-day pe- 
riod to run from the date of entry of the order appealed from or entry of an 
order denying reconsideration thereof where petitions for consideration are 
allowed by the Commission's rules, whichever is later. 

(2) Appeals should be commenced by the filing of a petition for review in 
the form of a notice of appeal. 

(3) Anyone seeking review should be required to serve notice of appeal 
upon all parties to the proceeding before the Commission, the Department of 
Justice, and the Commission. 

(4) When several appeals are taken from the same order of the Commis- 
sion, the venue should be determined by the first notice of appeal to be filed, 
and all subsequent appeals should be considered as taken to the same court, 
consolidated therewith, and handled as one appeal. 

(5) The Commission should provide the record of its proceedings on appeal 
and should transmit the record to the court. Until such time as procedures 
are developed whereunder the Commission may use mechanical facilities and 
methods for the production of the record in its proceedings in such form as to 
obviate printing or other reproduction of the record for judicial review, and 
provision is made for the designation of record after the filing of briefs, as 
recommended by the Conference, the record on appeal should consist of 



184 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

the entire record before the Commission, and should be transmitted to the 
court within the time allowed for the filing of briefs. The record should be 
returned to the Commission upon final decision of the appeal. 

Supporting Report of the Committee on Judicial Review 

We ask that the Administrative Conference of the United 
States adopt the following recommendations : 

1. The Administrative Conference recommends that review of 
Interstate Commerce Commmission orders should be by appeal to 
the Courts of Appeal in all cases where at present a special three 
judge court is used. District Courts should be relieved of their 
jurisdiction under 28 U.S.C. 1336 and the Courts of Appeal 
should have exclusive jurisdiction to review these orders of the 
Commission. 

2. The Administrative Conference recommends that final re- 
view by the Supreme Court of Interstate Commerce Commission 
orders should be only by petition for a writ of certiorari. 

3. The Administrative Conference recommends that review of 
Interstate Commerce Commission orders should be permitted in 
any judicial circuit wherein is the residence or principal office 
of the party or any of the parties filing the request for review. 

4. The Administrative Conference recommends that there 
should be a 60 day time limit on all appeals from Interstate Com- 
merce Commission orders to the Courts of Appeal. Notice of ap- 
peal should be filed within 60 days after entry of the order ap- 
pealed from or after entry of an order denying reconsideration 
of such order where petitions for reconsideration are alllowed by 
the Commission's rules, whichever is later. 

5. The Administrative Conference recommends that the In- 
terstate Commerce Commission should provide and transmit the 
record upon appeal. Until effectuation of the Recommendations 
in Group II, the record on appeal should consist of the entire 
record before the Commission and should be transmitted to the 
Court within the time allowed for submission of the final briefs 
of appellees on the appeal. The record should be returned to the 
Commission upon final decision of the appeal, or upon the print- 
ing of the record on appeal to the Supreme Court, whichever is 
earlier. 

6. The Administrative Conference recommends that when sev- 
eral appeals are taken from the same order of the Interstate 
Commerce Commission, the venue should be determined by the 
first notice of appeal to be filed, and all subsequent appeals should 



REC. 8. REVIEW OF ICC ORDERS 185 

be considered as taken to the same court and consolidated there- 
with and handled as one appeal. 

7. The Administrative Conference recommends that appeals 
from Interstate Commerce Commission orders should be com- 
menced by the filing of a petition for review in the form of a 
notice of appeal. 

8. The Administrative Conference recommends that anyone 
seeking review of an Interstate Commerce Commission order 
should be required to serve notice of appeal upon all of the parties 
to the proceeding before the Commission, and upon the Depart- 
ment of Justice, and the Commission. Anyone who is a party to 
the proceeding before the Commission may intervene as of right 
in the review proceeding by giving timely notice thereof to the 
Court, the Commission, the Department of Justice, and all the 
other parties within 30 days after receiving notice of the appeal. 
Thereafter, intervention may also be allowed at the discretion 
of the court. 

Note: None of the above recommendations are intended to change the 
present law with respect to reviewable acts, the scope of review, or the 
existing allocation of responsibility and authority between the Commission 
and the Department of Justice in actions to review or set aside orders of 
the Commission. 

Comments 

1. Under the present system, orders of the ICC are reviewed 
by specially-constituted three- judge federal district courts. 28 
U.S.C. 1336, 2284, 2325. It should be noted, however, that so- 
called reparation orders of the ICC are reviewable by single 
judge district courts, although these make up only a minor part 
of judicial review of ICC orders. For all other orders, exclusive 
jurisdiction for review rests with three-judge district courts; 
this system has been in effect since February, 1903, although its 
present statutory base is the Urgent Deficiencies Act of 1913. 

2. To the best of our knowledge, the ICC is the sole agency of 
the United States Government the orders of which are review- 
able by three-judge courts. The systems for orders of other agen- 
cies, such as the FCC, which formerly were so reviewable have 
now been changed to provide for review by the Courts of Appeals. 

Note: We understand that, with respect to the Department of Agriculture, 
some use has been made of three-judge courts for review of some D/A 
programs pursuant to the provisions in 28 U.S.C. Sees. 2281-2282, in con- 
nection with injunctions. We are, however, of the opinion that this is a 
relatively minor problem and should be handled separately from the present 
problem. 



186 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

3. The decisions on ICC orders by three-judge district courts 
now may be appealed directly to the United States Supreme 
Court. (This is not a certiorari proceeding.) 

4. In the six-year period from July, 1955 to June, 1961, 398 
actions challenging orders of the ICC were instituted. Of these, 
159 came in the period of July, 1959 to June, 1961. Orders under 
attack most often were those involving: rate questions, the grant 
or denial of certificates of public convenience and necessity and 
permits; the interpretation of such certificates and permits; 
mergers and acquisitions; and abandonment and extension of 
railroad lines, 

5. The average length of time from the filing of the complaint 
to the decision in the district courts, with respect to those cases 
terminated during the three-year period ending June, 1961, was 
approximately nine months. Several cases pending for more than 
two years make that figure somewhat misleading. 

6. By and large, with some exceptions, review of the orders of 
federal administrative agencies is by the Courts of Appeals. This 
includes the Federal Communications Commission, the Federal 
Maritime Board, the Federal Power Commission, the Federal 
Trade Commission, the Securities and Exchange Commission, 
and the National Labor Relations Board. 

Thus it would seem that the trend of modern review statutes 
is toward use of the several Courts of Appeal. Furthermore, while 
we understand that some trouble has resulted so far as the FCC 
is concerned, chiefly because of dual avenues of appeal, it would 
appear that this trend has been generally efficacious. 

7. Although we do not as yet have access to complete data for 
all of the Courts of Appeals, it would seem that Court of Appeal 
review of administrative orders, as a general rule, may require a 
little longer period of time than does the three-judge system now 
in use for the ICC. For the Court of Appeals for the District of 
Columbia, which perhaps is the most important of the several 
circuits so far as review of administrative orders is concerned, 
the median length of time for review of such orders during the 
past three fiscal years is as follows:- 

Fiscal Year 1959 Fiscal Year 1960 Fiscal Year 1961 



Approximately Approximately Approximately 

9 months 10.6 months 10.5 months 

In our judgment, however, this fact — even if it is borne out 
by data from the other Courts of Appeals — should not be con- 
sidered conclusive of the question under discussion. At least the 



REC. 8. REVIEW OF ICC ORDERS 187 

following other factors must be weighed and evaluated before 
reaching a conclusion: (a) the differences, if any, in the type of 
orders reviewed by the Courts of Appeals from the other agencies 
as compared to those reviewed by three-judge courts; (b) the 
importance to be given to the most efficient use of the time of 
district judges; is the small gain worth the time and trouble of 
convening three-judge courts? (c) the possible greater degree 
of expertise in judges of the Courts of Appeals in reviewing ad- 
ministrative orders as compared with the district judges; and 
(d) the desirability of whether ultimate review by the Supreme 
Court should be by appeal or by the discretionary writ of cer- 
tiorari. We believe that the possible — although not yet proved — 
saving in time for review is outweighed by the other factors 
mentioned. 

8. There is the question whether final review by the Supreme 
Court should be by appeal as of right or by discretionary writ of 
certiorari. Although we recognize that arguments may be found 
on both sides, it is our belief that final review by the Supreme 
Court of ICC orders should be by writ of certiorari. Our reasons 
for this position include: (i) apparently, many appeals today 
from three-judge courts are handled strictly on the pleadings, 
with no more attention being given to them than for a denial of 
certiorari in other cases; (ii) the Supreme Court has been criti- 
cized of late for assuming too heavy a load; (iii) we perceive no 
reason why transportation is any more important to the Ameri- 
can people than communications, labor relations or natural gas 
matters, all of which are now subject to final review only by 
certiorari. 

9. Should all of the Courts of Appeal be utilized in review of 
ICC orders or only one (e.g., the Court of Appeals for the Dis- 
trict of Columbia) ? There are arguments both ways. Reference 
to a single Court of Appeals permits the judges of that court to 
become highly skilled in the intricacies of the agency and thus 
to render decisions and opinions of high quality. On the other 
hand, it seems that the ICC bar is relatively decentralized 
throughout the United States and it might place a burden upon 
litigants and their attorneys to have to resort to one Court of 
Appeals only. 

We believe that it is in the interests of furthering progress 
while placing as minimal a strain on existing procedure as is 
possible to provide for resort to the several Courts of Appeals. 

10. There is no statutory time limit for the institution of ac- 
tions to review orders of the ICC, other than reparation orders, 



188 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

but the doctrine of laches does apply. We believe that there 
should be a fixed time limit, and accordingly recommend the 
provision of 60 days as that limit. 

11. Under present procedure, the party seeking review of an 
ICC order has to furnish a copy of the record before the Com- 
mission, get it certified by the Commission, and file it in court. 
This is at the expense of the party seeking review. Unlike other 
agencies, the ICC is not required to supply or file the record of 
its proceedings with the court. 

Although we understand that the plaintiff need not file a cer- 
tified copy of the entire record before the ICC unless he attacks 
the substantiality of the evidence to support the Commission's 
conclusions (as he usually does), and also that the record is not 
printed unless an appeal is taken to the Supreme Court and that 
Court consents to hear the case on oral argument, we believe that 
the ICC procedure with respect to the record should be brought 
into conformity with that of other agencies. 

12. Under present procedure there is no provision for consoli- 
dating into a single court multiple suits against a single ICC 
order. We understand that it frequently happens that several ac- 
tions are started in two or more districts. In our opinion, this 
practice should be brought into consonance with modern review 
statutes by a provision that the first notice of appeal to be filed 
should determine venue, and that all other appeals of that order 
should be consolidated therewith. 

13. The form of review of ICC orders should be changed from 
the present, original action to that of an appeal, commenced by 
a petition for review in the form of a notice of appeal. 

14. Under present procedure, in actions to set aside ICC or- 
ders, the United States is the only necessary party upon whom 
service of process is required. Other parties to the case before 
the ICC usually do not have actual notice that the case is being 
reviewed. We believe that all parties should be notified. Accord- 
ingly, we recommend that provision be made for the burden of 
giving notice of appeal from an ICC order to be placed upon the 
appellant, that party to be responsible for service of appropriate 
notice upon all parties to the proceeding before the ICC and 
upon the ICC and the Department of Justice. 

15. The Judicial Conference adopted a resolution in 1943 to 
the effect that "review of orders of the Interstate Commerce Com- 
mission . . . now reviewable by a district court of three judges 
from whose decision an appeal lies to the Supreme Court, should 
be made upon petition to the appropriate circuit court of appeals 



REC. 8. REVIEW OF ICC ORDERS 189 

on the record made before the administrative body; that any 
further review should be by the Supreme Court on petition for 
writ of certiorari, and that the United States and the Commis- 
sion should each have the right to petition for writ of certiorari." 
This action by the Judicial Conference was taken as a result of 
a representation by Chief Justice Harlan F. Stone in 1942 that, 
under existing law, the time of the Supreme Court was being 
taken in the consideration of appeals of right from three- judge 
district courts in relation to orders of the Interstate Commerce 
Commission which did not involve issues important enough to go 
to that Court, and that the method of review ought to be by cer- 
tiorari, optional with the court, as is most other cases." (Hear- 
ings before Subcommittee No. 3 and Subcommittee No. 4 of the 
Committee on the Judiciary, House of Representatives, on H.R. 
1468, H.R. 1470, and H.R. 2271 of the 80th Congress, and Hear- 
ings before Subcommittee No. 2 on H.R. 2915 and H.R. 2916 of 
the 81st Congress) (1949) (the chronology is set out therein on 
pages 78 et seq., in a letter dated January 23, 1947, from the 
Director of the Administrative Office of the United States Courts 
to the Speaker of the House of Representatives) . 



RECOMMENDATION NO. 9 

STATUTORY REFORM OF THE SOVEREIGN IMMUNITY 

DOCTRINE. 



The technical legal defense of sovereign immunity, which the 
Government may still use in some instances to block suits against 
it by its citizens regardless of the merit of their claims, has be- 
come in large measure unacceptable. Many years ago the United 
States by statute accepted legal responsibility for contractual 
liability and for various types of misconduct by its employees. 
The "doctrine of sovereign immunity" should be similarly lim- 
ited where it blocks the right of citizens to challenge in courts 
the legality of acts of governmental administrators. To this end 
the Administrative Procedure Act should be amended. 

RECOMMENDATION 

1. Section 702 of title 5, United States Code (formerly section 
10(a) of the Administrative Procedure Act), should be amended 
by adding the following at the end of the section : 

An action in a court of the United States seeking relief other than 
money damages and stating a claim that an agency or an officer or em- 
ployee thereof acted or failed to act in an official capacity or under color 
of legal authority shall not be dismissed nor relief therein denied on the 
ground that it is against the United States or that the United States is 
an indispensable party. The United States may be named as a defendant 
in any such action, and a judgment or decree may be entered against the 
United States. Nothing herein (1) affects other limitations on judicial 
review or the power or duty of the court to dismiss any action or deny 
relief on any other appropriate legal or equitable ground; or (2) confers 
authority to grant relief if any other statute that grants consent to suit 
expressly or impliedly forbids the relief which is sought. 

2. Section 703 of title 5, United States Code (formerly section 
10(b) of the Administrative Procedure Act), should be amended 
by adding the following sentence after the first full sentence: 

If no special statutory review proceeding is applicable, the action for 
judicial review may be brought against the United States, the agency by 
its official title, or the appropriate officer. 



190 



REPORT OF THE COMMITTEE ON JUDICIAL REVIEW 
IN SUPPORT OF RECOMMENDATION NO. 9 



Prepared by 

Roger C. Cramton 

Professor of Law 

University of Michigan 



Introduction 

The doctrine of sovereign immunity is merely one piece in the 
complicated puzzle of remedies against the United States and its 
officials. The general pattern of which sovereign immunity is 
but a piece may be described as follows : 

It is now generally accepted that courts make a useful contri- 
bution to administi-ation by testing the legality of official action 
which adversely affects private persons. This premise, often re- 
ferred to as the "presumption of reviewability," is discussed and 
elaborated by L. Jaffe, Judicial Control of Administrative Ac- 
tion c. 9 (1965), and by K. Davis, 4 Administrative Law Treatise 
c. 28 (1958). The presumption of reviewability is reflected not 
only in court decisions but in a plethora of statutes in which 
Congress has provided for judicial review of federal administra- 
tive action by creating remedies of special or general application. 
Probably most administrative action is reviewable under these 
"statutory review procedures." Moreover, two traditional areas 
in which sovereign immunity was especially powerful — actions to 
recover tort and contract damages from the United States — are 
now covered by detailed statutory enactments: (1) contract ac- 
tions against the United States have been handled since 1855 by 
the Court of Claims, and, since the enactment of the Tucker Act 
in 1887, also by federal district courts when the amount of the 
claim does not exceed $10,000 (see 28 U.S.C. §§ 1346, 1491) ; and 
(2) tort actions against the United States may be entertained 
pursuant to and subject to the limitations of the Federal Tort 
Claims Act of 1946 (see 28 U.S.C. § 1346(b), 1402(b), 1504, 
2110, 2401, 2402, 2411, 2412, 2671-80). Although there are 
gaps in each of these statutes that need reexamination (e.g., the 

191 



192 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

Tort Claims Act is subject to exceptions, some of which are ques- 
tionable), consideration of sovereign immunity should proceed 
on the assumption that review of the adequacy of tort and con- 
tract remedies against the United States is a matter of another 
day. 

When the existence of these statutory remedies is taken into 
account, sovereign immunity comes into play primarily in those 
situations in which an individual complains that the Government 
or its officer has violated or intends to violate a duty which the 
Constitution, a statute, or the common law imposes upon the 
Government and no statutory remedy has been provided. The in- 
dividual must invoke the special or general federal-question 
jurisdiction of a United States district court in a nonstatutory 
review proceeding seeking injunctive, mandatory, or declaratory 
relief. It is in these situations that sovereign immunity may be 
invoked by the Government as a limitation upon the court's juris- 
diction and power. This is the area with which this recommen- 
dation is concerned. 

The rule that the United States cannot be sued without its 
consent developed slowly during the nineteenth century as a tacit 
assumption rather than a reasoned doctrine. Federal courts were 
not given general federal-question jurisdiction until 1875 and 
there was therefore little occasion for square holdings on the 
matter. Most of the early dicta on the subject came in cases ad- 
vocating a strict construction of the Court of Claims Act to pre- 
clude other contract remedies. As late as 1882, Justice Miller — 
striving to interpret the scope of the immunity in the light of 
the reasons for it — observed that "while the exemption of the 
United States and of the several States from being subjected as 
defendants to ordinary actions in the courts has . . . been re- 
peatedly asserted here, the principle has never been discussed or 
the reasons for it given, but it has always been treated as es- 
tablished doctrine." United States v. Lee, 106 U.S. 196, 207 
(1882). 

At various times it has been stated that the basis of the doc- 
trine is (1) the traditional immunity of the English sovereign, 
surviving by implication the grant of judicial power in Article 
III (see Hamilton, The Federalist, No. 81) ; (2) the inability of 
the courts to enforce a judgment (see Jay, C. J., in Chisholm 
V. Georgia, 2 U.S. (2 Dall.) 419, 478 (1793) ; and (3) the "logical 
and practical ground that there can be no legal right as against 
the authority that makes the law on which the right depends" 
(see Holmes, J., in Kawa'rianakoa v. Polyblank, 205 U.S. 349, 353 



REC. 9. SOVEREIGN IMMUNITY 193 

(1907) ). These conceptual arguments for sovereign immunity are 
now totally discredited. The only rationale for the doctrine that 
is now regarded as respectable by courts and commentators alike 
is that official action of the Government must be protected from 
undue interference. See Larson v. Domestic and Foreign Com- 
merce Corp., 337 U.S. 682, 705 (1949) (Douglas, J., concurring) ; 
Block, Suits Against Government Officers and the Sovereign Im- 
munity Doctrine, 59 Harv. L. Rev. 1060 (1946); Byse, Proposed 
Reforms in Federal "Nonstatutory" Judicial Review: Sovereign 
Immunity, Indispensable Parties, Mandamus, 75 Harv. L. Rev. 
1479, 1484-93 (1962); Carrow, Sovereign Immunity in Adminis- 
trative Law — A New Diagnosis, 9 J. Pub. L. 1-23 (1960) ; Davis, 
3 Administrative Law Treatise c. 23 (1958 and 1965 Pocket 
Part) ; Jaffe, Judicial Cont^^ol of Ad^ninistrative Action 197-231, 
348-53 (1965) ; Note, Re^nedies Against the United States and 
Its Officials, 70 Harv. L. Rev. 827-64 (1957). The articles and 
materials cited above constitute a basic bibliography on the 
subject. 

The doctrine of sovereign immunity has never had the effect 
of insulating official conduct from judicial scrutiny and control. 
Through one device or another federal courts have always enter- 
tained suits which were directed against the sovereign in the 
sense that the proceeding challenged official conduct and required 
officials to do or not do particular things. Although not always 
perceived in this fashion, largely because of the direction in 
which developing doctrine channelled thinking, sovereign im- 
munity has always been a question of whether particular conduct 
should be reviewable in the courts and not whether the sovereign 
has consented to suit. 

Professor Byse has summarized the fictional metamorphosis 
which allowed private individuals to obtain judicial review of 
"sovereign" acts : 

"In light of the failure of Congress to provide a statutory method of 
review during the formative era of administrative law, a literal applica- 
tion of the sovereign immunity doctrine often would have left the citizen 
remediless against harsh and illegal acts of his government. Such a re- 
result could not be tolerated. The courts were equal to the challenge. They 
reasoned that although the sovereign principal might be immune from 
suit, the privilege of the principal could not be claimed by the agent, who 
therefore could be restrained from committing the wrongful act. In the 
words of a leading case, a public official who acts under an unconstitu- 
tional statute or outside his statutory authority is 'stripped of his official 
or representative character and is subjected in his person to the conse- 
quences of his individual conduct.' [Ex parte Young, 209 U.S. 123, 160 
(1908). . . .] Thus a controversy that was in fact between a private 



194 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

person and the federal government was transmuted into a controversy 
between two private persons. By means of this fiction the courts were 
able to exert a significant measure of control over the bureaucracy." 
Byse, Proposed Reforms in Federal "Nonstatutory" Judicial Review, 75 
Harv. L. Rev. 1479, 1484-85 (1962). 

The basic problem with the sovereign immunity doctrine is 
that it has developed by fits and starts through a series of fic- 
tions. The resulting patchwork is an intricate, complex and not 
altogether logical body of law. The basic issue — balancing the 
public interest in preventing undue judicial interference with 
ongoing governmental programs against the desire to provide 
judicial review to individuals claiming that Government has 
harmed or threatens to harm them — is obscured rather than as- 
sisted by the doctrine of sovereign immunity in its present form. 

I. Sovereign Immunity Prior to Larson 

One effect of the sovereign immunity doctrine was to prevent 
suits against the United States eo yiomine except as Congress 
had authorized such units. A complicated body of case law, how- 
ever, separated situations in which an individual could obtain 
relief against the Government by suing its officer and situations 
in which such relief would be unavailable. The law before Lar- 
son v. Domestic & Foreign Commerce Corp., 337 U.S. 682 (1949), 
cast new gloom into this dark corner of the law, however, was 
tolerably clear and could be stated in a general way as follows: 

A. In General : Restraining Harmful Conduct 

The most clearly permissible type of action against a govern- 
ment official was that in which (a) the plaintiff sought to enjoin 
conduct or threatened conduct which, if not ofl^cially justified, 
would constitute a common-law tort, and (b) the relief sought 
could be given by simply directing the defendant to abstain 
from what he was doing or threatening to do. Once the plain- 
tiff alleged facts that would entitle him to equitable relief against 
a private citizen, the fact that the defendant was a government 
officer did not provide a complete defense but merely an oppor- 
tunity for justification. The sovereign-immunity doctrine failed 
to provide official justification in two well- recognized kinds of 
cases: (1) when the ofllicer was held to have exceeded the author- 
ity delegated to him by Congress (e.g., Land v. Dollar, 330 U.S. 
731 (1947) (alternative holding) ; Philadelphia Co. v. Stimson, 
223 U.S. 605, 619-20 (1912) ; American School of Magnetic 
Healing v. McAnnulty, 187 U.S. 94, 109 (1902)) ; and (2) when 



REC. 9. SOVEREIGN IMMUNITY 195 

the statute that purported to authorize the officer's act was found 
to be unconstitutional {e.g., Georgia R.R. & Banking Co. v. Red- 
wine, 342 U.S. 299, 304-06 (1952); Ex parte Young, 209 U.S. 
123, 155-60 (1908) ; Osborn v. Bank of the United States, 22 
U.S. (9 Wheat.) 738,836-37 (1824)). 

When the defendant (a government officer) sought to justify 
an alleged tort by showing statutory authority, the court could 
not dispose of the case on the ground of sovereign immunity 
without deciding the issue of statutory authority thus presented. 
No distinction was attempted between an allegation of error in 
the performance of generally authorized duties and an allegation 
of violation of a statute. Error would support a charge of action 
in excess of statutory authority unless the action was committed 
to the defendant's discretion. For example, in Philadelphia Co. 
v. Stimson, 223 U.S. 605 (1912), a statute authorized the Secre- 
tary of War to fix a harbor line beyond which the building of 
piers or other works was a misdemeanor. A property owner sued 
to enjoin the Secretary from prosecuting him on account of con- 
struction of a wharf beyond the line the Secretary had fixed. 
The Court, in a unanimous opinion by Hughes, J., granted re- 
lief against tortious interference with plaintiff's use of his land: 

"The exemption of the United States from suit does not protect its of- 
ficers from personal liability to persons whose rights of property they 
have wrongfully invaded. . . . The principle has frequently been applied 
with respect to state officers seeking to enforce unconstitutional enact- 
ments. . . . And it is equally applicable to a Federal officer acting in ex- 
cess of his authority or under an authority not validly conferred." 223 
U.S. at 619-20. 

These general ideas were modified by special sensitivity to ju- 
dicial interference when the relief sought fell into any of three 
special categories: (1) enforcement of contracts against the 
United States; (2) directing government officers to pay over 
public moneys; and (3) directing officials to give over property 
which is in the possession of the United States and to which the 
United States unquestionably has legal title. Each of these situa- 
tions deserves some special comment. 

B. Enforcement of Contracts Against the United States 

The immunity of the United States from suit developed in the 
context of the similar immunity of the states under the Eleventh 
Amendment. The central notion underlying the Eleventh Amend- 
ment was that a court cannot without consent enforce a contract 
against the sovereign. The provision of a statutory contract rem- 



196 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

edy against the United States in the Court of Claims was prop- 
erly viewed as an exclusive remedy. A long line of cases held 
that federal courts cannot give specific performance of a contract 
against the United States. E.g., Wells v. Roper, 246 U.S. 335 
(1918); United States ex rel. Goldberg v. Daniels, 231 U.S. 218 
(1913); Louisiana v. Jumel, 107 U.S. 711, 721, 727 (1882). The 
damage remedy in the Court of Claims (or in certain instances 
in the district court pursuant to the Tucker Act) is the only 
remedy. 

C. Orders Directing Payment of Public Moneys 

A case in which the plaintiff seeks to order a government of- 
ficer to pay over public funds in his possession presents a special 
problem. Whether the remedy sought is mandamus or injunc- 
tion, the plaintiff seeks affirmative relief of a particularly deli- 
cate kind. Effective government is dependent upon an ample pro- 
vision of funds, and an order requiring the public treasury to 
disgorge poses a substantial threat. Consequently, the circum- 
stances under which a court may compel the payment of public 
moneys are restricted to those in which the official lacks discre- 
tion and there is a statutory duty owed to the plaintiff. In Mine 
Safety Appliances Co. v. Forrestal, 326 U.S. 371 (1945), for 
example, a government contractor sought to "restrain" the Sec- 
retary of Navy from withholding payments allegedly due on a 
contract. The Secretary had withheld payments pursuant to the 
Renegotiation Act on the ground that the plaintiff had made 
excessive profits ; the plaintiff contended that the Secretary's con- 
duct was unauthorized and unconstitutional. The Court dismissed 
the action as one against the United States to which it had not 
consented. Although framed as a suit for a prohibitory injunc- 
tion, the plaintiff in fact sought to compel the payment of gov- 
ernment funds in a situation in which Congress had not directed 
that such payments be made. Plaintiff's contract remedy in the 
Court of Claims was a perfectly adequate one. See also Morrison 
V. Work, 266 U.S. 481, 488 (1925) (suit to require officers to sell 
Indian reservation lands and distribute proceeds to various claim- 
ants barred by sovereign immunity) . 

On the other hand, where a statute imposes a clear duty upon 
a government officer to pay a claimant, mandatory relief is avail- 
able in the federal courts. E.g., Miguel v. McCarl, 291 U.S. 442 
(1934) (mandatory injunction against disbursing officer requir- 
ing him to pay retirement allowance to which plaintiff was en- 
titled by law) ; Roberts v. United States, 176 U.S. 221 (1900) 



REC. 9. SOVEREIGN IMMUNITY 197 

(mandamus directing Treasurer to make certain payments which 
an Act of Congress, as construed by the Court, required him to 
make) ; Clackamas County, Oregon v. McKay, 219 F. 2d 479 
(D.C. Cir. 1954), vacated as moot, 349 U.S. 909 (1955) (man- 
damus directing Secretary of Interior to distribute to certain 
counties in Oregon the monetary proceeds received by him from 
the sale of land which had reverted to the United States after 
certain grantee railroads had forfeited their rights to it; the 
only action required of the Secretary, according to the court's 
construction of the statute, was "ministerial" rather than "dis- 
cretionary"). 

D. Orders Directing the Transfer of Government Property 

Apart from cases in which the United States is named as a 
party defendant, the clearest class of cases which were open to 
the defense of sovereign immunity under the pre-Larson law 
were actions to establish an interest in, or satisfy a claim out 
of, property of the United States, where the United States un- 
questionably had title and the property was in possession of its 
officers or agents. E.g., Maricopa County v. Valley Nat. Bank, 
318 U.S. 357, 362 (1943) ; Minnesota v. United States, 305 U.S. 
382 (1939) ; Oregon v. Hitchcock, 202 U.S. 60, 69 (1906) ; The 
Siren, 74 U.S. (7 Wall.) 152, 154 (1868). Even in this situation, 
however, mandatory relief is available if a statute imposes a clear 
duty on the officer in favor of the claimant. E.g., Wilber v. 
United States ex rel. Krushnic, 280 U.S. 306 (1930) (mandamus 
granted directing the Secretary of the Interior to issue a mining 
patent); Payne v. Central Pac. Ry., 225 U.S. 228 (1921) (Sec- 
retary of the Interior enjoined from interfering with railroad's 
selection of indemnity lands when Secretary was under a "plain 
official duty" without discretion "to substitute his judgment for 
the will of Congress") ; Lane v. Hoglund, 244 U.S. 174 (1917). 

One situation in which the law was unclear prior to Malone 
V. Bowdoin, 369 U.S. 643 (1962), discussed at pp. 15-17, infra, 
was that in which the plaintiff claims title to specific property 
and the officer defends on the ground that title is in the United 
States. A venerable earlier case granted relief in this situation. 
United States v. Lee, 106 U.S. 196 (1882), but other cases had 
refused to do so, asserting that the action was against the United 
States if the property is in its possession. E.g., Goldberg v. Dan- 
ieU, 231 U.S. 218, 221-22 (1913) ("the United States is the 
owner in possession of the vessel") ; Oregon v. Hitchcock, 202 
U.S. 60, 70 (1906) ("again, it must be noticed that the legal 



198 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

title to all these tracts of land is still in the Government") ; cf. 
West Coast Exploration Co. v. McKay, 213 F.2d 582, 596 (D.C. 
Cir. 1954). 

II. Defects of Present Law 

Professors Hart and Wechsler have suggested that "the Su- 
preme Court in modern times has , . . tended actually to enlarge 
the scope of sovereign immunity, out of misapprehension of its 
historical foundations, while at the same time professing to re- 
gard it with disfavor as an anachronism which should be nar- 
rowly confined." Hart & Wechsler, The Federal Courts and the 
Federal System 1151 (1953). This comment, made in 1953, is 
even more true today. A series of Supreme Court decisions, be- 
ginning with Larson v. Domestic & Foreign Commerce Corp., 337 
U.S. 682 (1949), and culminating in Hawaii v. Gordon, 373 U.S. 
57 (1963), have strengthened the hold of the sovereign immunity 
doctrine, created widespread confusion, and directed attention 
to fictions rather than real problems. If the law of sovereign im- 
munity is in need of reform it is largely because Supreme Court 
decisions of the last two decades have further complicated a sub- 
ject that was already confused. 

A. The Larson Case 

In Larson v. Domestic & Foreign Commerce Corp., 337 U.S. 
682 (1949), the War Assets Administrator contracted to sell coal 
to the plaintiff, but after disagreement over a term of the con- 
tract he arranged to sell the coal to a third person. The plaintiff 
sought to enjoin sale of the coal to anyone but himself, charging 
that, since title to the coal had passed under the contract of sale, 
the Administrator was guilty of conversion. The Court denied 
injunctive relief in a cloudy opinion by Vinson, C. J., that at- 
tempted to restate the law of sovereign immunity applicable to 
suits for nonmandatory injunction against government officers. 
A suit may be brought against an oflficer if the officer has acted 
"unconstitutionally" or "ultra vires his authority." But the mere 
allegation that the officer, "acting ofllicially" wrongfully holds 
plaintiff's property, while establishing a wrong to plaintiff, does 
not establish "that the officer ... is not exercising powers dele- 
gated to him by the sovereign." 337 U.S. at 693. And, again, "a 
suit may fail ... if the relief requested cannot be granted by 
merely ordering the cessation of the conduct complained of but 
will require affirmative action by the sovereign or the disposition 
of unquestionably sovereign property." Id., at 691, n. 11. 



REC. 9. SOVEREIGN IMMUNITY 199 

The case itself fell squarely between two conflicting lines of 
authority, one, stemming from United States v. Lee, 106 U.S. 196 
(1882), and Land v. Dollar, 330 U.S. 731 (1947), in which in- 
junctive relief had been granted for tortious withholding of prop- 
erty now in the possession of the Government, and the other, as 
in Goldberg v. Daniels, 231 U.S. 218 (1918), denying relief when 
the property that the plaintiff complained he had contracted for 
was in the possession of the Government. The Court could have 
reached the same result that it did reach by treating the case 
as an impermissible attempt to obtain specific performance 
against the Government, or on the ground that plaintiff's proper 
and adequate remedy was a suit for damages in the Court of 
Claims. 

It is surprising that the Larson opinion has had so much in- 
fluence. The case was decided by a divided Court (6-3) with 
Rutledge, J., concurring only in the result and Douglas, J., con- 
curring on the narrow ground that an injunction in the situa- 
tion presented would interfere with the surplus property pro- 
gram. Vinson's opinion, which was confused and rambling, thus 
had the support of only four members of the Court. It purported 
to overrule or narrowly limit several well-established lines of 
cases, including Land v. Dollar, 330 U.S. 731 (1947), decided 
only two years before. Nevertheless, the Larson opinion has been 
taken as the modern keystone of the sovereign immunity doctrine. 

The Larson opinion has four fundamental defects. (1) It holds 
that the official's conduct, although wrongful, may not be en- 
joined if he is acting within the general sphere of his authority. 

(2) It determines the application of the sovereign immunity 
doctrine by a wholly irrelevant test — whether the Government, 
if a private principal, would be liable for the acts of its agent. 

(3) The application of sovereign immunity is said to turn on 
whether the suit is "in effect, a suit against the sovereign" 
"stopping the Government in its tracks." And (4) the opinion 
states that affirmative relief may not be granted against a Gov- 
ernment officer. 

1. "Error" distinguished from "authority." The Larson opin- 
ion limits suits to enjoin officers to : 

"[W]here the officer's powers are limited by statute, his actions be- 
yond those limitations are considered individual and not sovereign ac- 
tions. . . . His actions are ultra vires his authority and therefore may be 
made the object of specific relief. It is important to note that in such 
cases the relief can be granted, vi^ithout impleading the sovereign, only 
because of the officer's lack of delegated power. A claim of error in the 
exercise of that power is therefore not sufficient. . . ." 337 at 689-90. 



200 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

At a later point in the opinion the Court again distinguishes 
between action which is erroneous or wrongful ("error") and 
action which is within the officer's general competence ("author- 
ity") : 

"It is argued that an officer given the power to make decisions is only 
given the power to make correct decisions. . . . There is no warrant for 
such a contention in cases in which the decision made by the officer does 
not relate to the terms of his statutory authority. Certainly the jurisdic- 
tion of a court to decide a case does not disappear if its decision on the 
merits is wrong. And we have heretofore rejected the argument that of- 
ficial action is invalid if based on an incorrect decision as to law or fact, 
if the officer making the decision was empowered to do so." 337 U.S. at 
695. 

Congress, of course, may commit administrative action to 
agency discretion, thus foreclosing judicial review except for ar- 
bitrary or capricious action. "The vice of Larson," however, as 
Professor Byse has stated, is that it permits — perhaps even en- 
courages — "courts to shirk the hard task of determining the lim- 
its of official power" : 

"It is perfectly possible for a court to hold that an official has au- 
thority to make erroneous as well as correct determinations. Such a hold- 
ing, of course, should rest on a reasoned determination that Congress 
intended to confer so broad a discretion. But under Larson [and its prog- 
eny] the courts seem to interpret that statutes cursorily to authorize 
the defendant official to act in the 'general' area in question; so long as 
the official remains within the 'general' area, his erroneous acts are un- 
reviewable whether or not the statute properly construed was intended to 
confer such an unreviewable discretion. This, I submit, is an abdication 
of judicial responsibility." Byse, Proposed Reforms in Federal "Non- 
statutory" Judicial Review, 75 Harv. L. Rev. 1479, 1490-91 (1962). 

The Larson opinion is thus susceptible to the interpretation 
that the existence of "statutory authority" need not depend upon 
a careful construction of the statute in question, but that the 
case should be dismissed on sovereign immunity ground if the 
officer is acting within his general sphere of authority even 
though the particular action is prohibited by the statute prop- 
erly interpreted. 

Numerous decisions of lower federal courts support the prop- 
osition that Larson's distinction between "error" and "general 
authority" has been applied to deprive litigants of judicial con- 
sideration of the merits of their claim that an officer's conduct 
is unlawful. In Doehla Greeting Cards, Inc. v. Summerfield, 227 
F.2d 44 (D.C. Cir. 1955), users of the parcel post service brought 
an action against the Postmaster General to enjoin him from 
enforcing increased parcel post zone rates. Plaintiffs alleged that 



REC. 9. SOVEREIGN IMMUNITY 201 

the Postmaster General had failed to comply with a statutory 
requirement and that the rate order was arbitrary and capri- 
cious. The court dismissed on the ground that the suit was "one 
against the United States to which no consent had been given." 
The opinion seems to state, relying on Larson, that erroneous per- 
formance of a statutory duty is the act of the sovereign and 
cannot be enjoined. Unlike the situation in Larson, however, the 
basic postal law sets forth standards to be observed by the Post- 
master General when fixing rate changes of the sort in question 
in Doehla. To say that the defendant may not be enjoined despite 
a departure from those standards is to flout their very existence. 
The statute was not construed but ignored. The official is given 
a wholly unchecked discretion where such discretion was prob- 
ably denied to him by statute and without inquiry into whether 
Congress intended such discretion. 

Manhattayi-Bronx Postal Union v. Gronouski, 350 F.2d 451 
(D.C. Cir. 1965), is to much the same effect, although the court 
did undertake in an alternative holding to consider the merits 
of the claim that the Postmaster General had misconstrued an 
executive order dealing with collective bargaining by postal 
employees. 

Another troublesome case along similar lines is Kennedy v. 
Rabinowitz, 318 F.2d 181 (D.C. Cir. 1963), aff'd on other 
ground, 876 U.S. 605 (1964), in which the court refused to con- 
sider plaintiffs' argument that under the terms of the Foreign 
Agents Registration Act the Attorney General could not require 
them to register. The general power of the Attorney General "to 
construe the individual statutes and apply them to the facts be- 
fore him" was sufficient to authorize his action and to shield it 
behind the sovereign-immunity defense. A dissenting opinion 
pointed out the weakness of the majority's opinion. On certi- 
orari, the Supreme Court ignored its own repeated holdings that 
sovereign immunity is a jurisdictional issue and proceeded to 
decide the case against the plaintiffs on the merits. 

Other cases in which the court failed to construe the statute 
to determine whether Congress intended the officer to exercise 
unchecked discretion include Fay v. Miller, 183 F.2d 986 (D.C. 
Cir. 1950) (United States attorney has authority to request the 
telephone company to discontinue service to a plaintiff suspected 
of gambling, even though the attorney's action might be tortious 
and taken without sufficient evidence) ; Interstate Reclamation 
Bureau v. Rogers, 103 F. Supp. 205 (S.D. Tex. 1952) (local offi- 
cials of Department of Labor held to have "authority" to investi- 



202 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

gate, and even harass, an employer in attempts to induce com- 
pliance with the Fair Labor Standards Act, even though the 
court admitted that the employer's business might eventually be 
found not to be within the operation of the Act) . 

2. Reliance on "normal rules of agency." A related defect of 
the Larson opinion has also had the eflect of increasing greatly 
the plaintiff's burden of demonstrating an official departure from 
statute. The Court in Larson insisted that a showing of illegality 
under general law is not sufficient, the determinative question 
being whether the agent's act is that of the United States. When 
injunctive relief is sought the answer to this question was said 
to depend on whether the officer has "authority" in the sense 
that his actions would be regarded as those of a private principal 
under the normal rules of agency. 

As Professor Byse has said : 

"The weakness of [the Larson] reasoning is its failure to deal with 
a practical problem in practical terms. The basic issue is whether the ju- 
diciary should review alleged errors by administrative officials. Because 
Congress failed to provide a general mechanism for such reviews, the 
courts developed the fiction that suits to restrain unconstitutional or 
ultra vires acts were not suits against the government. The reason for 
the fiction was the practical judgment that although courts should not 
generally interfere with governmental operations, they should be availa- 
ble to correct administrative excesses. The issue in any doubtful case 
should be resolved with those practical considerations in mind. Instead of 
analyzing the problem in these terms, the Larson opinion resolves the 
issue by reference to the 'normal rules of agency.' But the reasons which 
have caused courts to impose liability on private principals for the acts 
of their agents have little if any relevance to the question whether al- 
legedly unlawful administrative actions should be subject to judicial re- 
view. The incongruous result of the Larson case is that to the extent the 
normal rules of agency impose liability on private principals, govern- 
mental officials are immunized from injunctive or declaratory relief. As 
private liability expands, official responsibility decreases." Byse, Pro- 
posed Reforms in Federal "Nonstatutory" Judicial Reviews, 75 Harv. L. 
Rev. 1479, 1487-88 (1962). 

Despite the incongruity of having Government nonliability 
turn on whether a private principal would be liable, and vice 
versa, lower federal courts have sometimes followed the Larson 
approach. In Hudspeth County Conservation & Reclamation Dist. 
No. 1 V. Robbins, 213 F.2d 425 (5th Cir. 1954), for example, the 
court cited Larson and then concluded: "Applying that test, it 
seems clear to us that if the dams . . . had been owned by a 
private corporation whose managers and agents had violated the 
rights of the plaintiffs in the manner contended in this suit, the 
private corporation could not escape liability for damages on the 



REC. 9. SOVEREIGN IMMUNITY 203 

ground that its employees were acting outside the scope of their 
authority." 213 F.2d at 432. 

3. Whether a suit is "in effect, a suit against the sovereign." 
Legal fictions may occasionally serve a useful purpose in hasten- 
ing a transition to sounder rules of law. In emphasizing the fic- 
tional aspects of the sovereign-immunity doctrine, however, the 
Larson opinion merely obfuscates the underlying policy consid- 
erations. The Court stated that in each injunction suit "the ques- 
tion is directly posed as to whether, by obtaining relief against 
the officer, the relief will not, in effect, be obtained against the 
sovereign" because "the compulsion . . . may be compulsion 
against the sovereign, although nominally directed against the 
individual officer. If it is, then the suit is barred . . . because 
it is, in substance, a suit against the Government." 337 U.S. at 
688. The problem with this formulation is that all injunction 
suits against government officers are designed to provide judi- 
cial control of administrative excesses. In Joint Anti-Fascist Ref- 
ugee Comm. V. McGrath, 341 U.S. 123 (1951), the plaintiff 
organization sought a declaratory judgment and injunctive re- 
lief against the Attorney General for having placed its name on 
the subversive list without a hearing. The Court held that, for 
purposes of a motion to dismiss, the Attorney General's act would 
be treated as unauthorized since it was alleged to be purely ar- 
bitrary. The injunction surely "stopped the Government in its 
tracks" and, in that sense, was directed against the sovereign. 
Hosts of similar injunction proceedings have been brought 
against federal officers. In recent years, for example, the Court 
has ordered the Government to reinstate an employee, Vitarelli 
v. Seaton, 359 U.S. 535 (1959), in effect ordered the Government 
to restore a revoked security clearance, Greene v. McElroy, 360 
U.S. 474 (1959), and in effect ordered the Government to carry 
particular mail. Manual Enterprises, Inc. v. Day, 370 U.S. 478 
(1962). 

4. Whether affirmative relief may be granted. A footnote to 
the Larson opinion contained a troublesome dictum: 

"Of course, a suit may fail, as one against the sovereign, even if it is 
claimed that the officer being sued has acted unconstitutionally or beyond 
his statutory powers, if the relief requested cannot be granted by merely 
ordering the cessation of the conduct complained of but will require af- 
firmative action by the sovereign or the disposition of unquestionably 
sovereign property." 337 U.S. at 691, n. 11. 

If "may" is read as "may" rather than "must," this sentence is 
not especially confusing. But since the sentence does not indicate 



204 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

any factors to be considered in determining whether affirmative 
relief is appropriate it suggests that mandatory relief cannot be 
granted. This erroneous notion has been picked up in subsequent 
decisions (see the discussion of Hawaii v. Gordon, infra) . 

B. The Malone Case — Proverty Disputes 

Malone v. Bowdoin, 369 U.S. 643 (1962), was an action to 
eject an officer of the United States Forest Service from land 
claimed by plaintiffs. The Court held that sovereign immunity 
barred the action. Under Larson, the Court said, an officer may 
not be sued even for the return of property wrongfully taken or 
held unless the action is "not within the officer's statutory powers, 
or, if within those powers, only if the powers, or their exercise 
in the particular case, are constitutionally void." There was no 
such allegation in Malone. Larson, the Court added, had limited 
United States v. Lee, 106 U.S. 196 (1882), to cases where there 
is a claim that the holding constituted "an unconstitutional tak- 
ing of property without just compensation." Moreover, Lee had 
been decided when there was no money remedy for the taking; 
in the present case the Court of Claims was open. See United 
States V. Causby, 328 U.S. 256, 267 (1946) . 

If Congress had authorized federal officers to seize private 
property and limited the owner's remedy to a damage action in 
the Court of Claims, the procedure would be constitutional even 
though harsh. But Congress has not authorized Forest Service 
officers to seize private land ; and the damage remedy in a distant 
forum is not a totally adequate remedy. The presumption that 
an officer who takes or withholds land which is admittedly the 
plaintiff's is acting without authority in absence of an affirma- 
tive showing of authority is more consistent with the general 
preference for judicial control of administrative excesses. 

Professor Davis' criticism of Malone as "patently unsound" 
is cogent: 

"The Malone opinion seems patently unsound. The case came upon 
motion to dismiss the action, and the Court assumed the facts to be as 
stated — that the fee was in the plaintiff and that the government's claim 
to the land rested only on a life tenant's transfer of a fee to the govern- 
ment. On these facts, the Court should have assumed, in absence of clear 
congressional intent to the contrary, that of course government officers 
are not authorized to withhold land from its lawful owner, and that of 
course the courts are the proper tribunals to determine who is the lawful 
owner. But instead of making these obvious assumptions, the Court made 
the opposite assumptions, by saying merely that the plaintiff had not as- 
serted that the officer was exceeding his delegated powers. 



REC. 9. SOVEREIGN IMMUNITY 205 

"Mr. Justice Douglas, in an opinion with which Mr. Justice Harlan 
agreed, asked in dissent: 'If legal title is actually in the claimant, if the 
action of the official in taking possession under authority of the United 
States is ultra vires, what objectionable interference with governmental 
functions can be said to exist?' 

"The majority of the Court did not answer the question. The answer is 
that a judicial determination of title to land is not an objectionable in- 
ference with governmental functions, even if the determination is that 
the private party is the owner of the land and is entitled to its posses- 
sion. What are courts for if they are barred from adjudicating disputes 
about land ownership and possession? Who in the entire society is bet- 
ter qualified to resolve a dispute about land titles than the courts?" 
Davis, Administrative Law Treatise §27.01 (1965 Pocket Parts, p. 147). 

In a number of recent cases Malone has been applied to deny 
district courts jurisdiction to consider land disputes between the 
United States and adjacent property owners. In Gardner v. Har- 
ris, 391 F.2d 885 (5th Cir. 1968), plaintiff's predecessor-in-title 
had sold land to the United States subject to an easement provid- 
ing a right-of-way across the conveyed land to abutting property. 
The conveyed land became part of the Natchez Trace Parkway 
and the federal officer in charge of the parkway erected barri- 
cades across the right-of-way. In an injunction suit seeking re- 
moval of the barricades, it was held that sovereign immunity 
barred the action. Judge Brown reasoned that the judgment 
would compel the government to act and would interfere with 
public administration ; hence suit could be brought only if the 
superintendent had exceeded his statutory powers. And the 
statute authorizing the superintendent to administer and main- 
tain the Natchez Trace Parkway did not contain any express 
limitation on the superintendent's powers of administration. 
"Merely because the Superintendent may have been acting 
wrongfully in interfering with plaintiff's access to the highway, 
either as a matter of violation of property rights under the deeds 
or as a tort under principles of general law, does not amount to 
circumstances fulfilling the exception that the officer must be 
acting beyond his statutory powers." 391 F.2d at 888. 

The Gardner decision is the logical stepchild of Larson and 
Malone, but the result is indefensible. When government officers 
mistakenly seize or hold private property, such mistakes both 
deprive persons of specific property and subject the United States 
to liability. The relevant question is whether Congress has au- 
thorized the seizure or condemnation of private property under 
the circumstances that existed; and in the absence of such au- 
thorization (and the limitation of the property owner to a dam- 
age remedy in the Court of Claims) the injunctive remedy should 



206 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

be provided. The courts should assume that Congress intends that 
officers who deal with property should keep within their powers 
in taking and withholding property that is claimed by private 
persons. Unless a vital regulatory program is involved (see dis- 
cussion of Dugan v. Rank, infra, pp. 19-20), Congress would 
probably prefer a prohibitory injunction to a grant of compen- 
sation after the fact. 

A substantial number of cases follow Malone in barring dis- 
trict court suits to resolve property disputes between the United 
States and private persons. Switzerland Co. v. Udall, 337 F. 2d 
56 (4th Cir. 1964) (similar to Gardner v. Harris) ; Simons v. 
Vinson, 394 F.2d 732 (5th Cir. 1968) (title to land formed by 
accretion along river which formed boundary between land 
owned by United States and land owned by plaintiffs; action 
barred by sovereign immunity) ; Andrews v. White, 121 F.Supp. 
570 (E.D.Tenn. 1954), aff'd per curiam, 221 F.2d 790 (6th 
Cir. 1955) (suit by landowner to enjoin federal officers from 
enforcing hunting regulations in what might have been part of 
a national park barred by sovereign immunity) ; cf. Zager v. 
United States, 256 F.Supp. 396 (E.D.Wis. 1966) (quiet title 
action to determine whether mistake had been made in original 
land survey not barred by sovereign immunity) . 

Regardless of whether broad proposals to reform sovereign 
immunity are accepted, the doctrine should be waived to permit 
property disputes between the United States and private persons 
to be entertained by district courts. Lawyers in the Department 
of the Interior, the federal agency having the greatest interest 
in the matter, do not oppose such a limited reform. 

C. Hawaii v. Gordon — Affirmative Relief 

A recent Supreme Court decision has strengthened the errone- 
ous notion, earlier advanced in Larson, that affirmative relief 
may not be granted against government officers. Hawaii v. Gor- 
don, 373 U.S. 57 (1963), involved the provisions of the Hawaii 
Statehood Act, which directed the President, if he should decide 
that certain federal properties were no longer needed by the 
United States, to convey them to the State of Hawaii. The Direc- 
tor of the Bureau of the Budget, acting for the President, advised 
federal agencies that this authorization related only to lands 
that had been ceded to the United States by Hawaii. The State 
filed an original action in the Supreme Court to compel the 
Director to withdraw his advice, to determine whether certain 
property he had excluded was "needed", and, if it was not needed, 



REC. 9. SOVEREIGN IMMUNITY 207 

to convey it to Hawaii. The Supreme Court dismissed the suit: 
"Relief soug'ht nominally against an officer is in fact against the 
sovereign if the decree would operate against the latter [citing 
Dwgan v. Rank, Malone v. Bowdoin, and Larson']. Here the or- 
der requested would require the Director's official affirmative ac- 
tion, affect the public administration of government agencies 
and cause as well the disposition of property admittedly belong- 
ing to the United States." 

Professor Davis argues that the "issue was not whether the 
lands should be conveyed — for that question was solely for the 
President — but whether a report should be made to the President 
with respect to designated lands. . . . Thus, the sole question 
was one of statutory interpretation." Davis, Administrative Law 
Treatise § 27.01 (1965 Pocket Parts p. 148) . 

A federal officer, of course, cannot be ordered by a court to 
exercise discretion in a particular way. But if a statute requires 
an officer to exercise discretion and the officer refuses to make the 
discretionary determination, a court can interpret the statute and 
require him to exercise discretion. Mandatory relief has been 
granted against federal officers for many years under such cir- 
cumstances; and the Hawaii case muddies the waters by sug- 
gesting that affirmative relief is always barred by sovereign 
immunity. 

D. Dugan v. Raiik — Interference with Governmental Programs 

Fictions aside, the application of the sovereign immunity doc- 
trine should rest on whether the benefits of judicial review of 
administrative action are outweighed by the possible interference 
with governmental programs that may result from the grant of 
relief. Dugan v. Rank, 372 U.S. 609 (1963), involves this question 
and was correctly decided. Dugan was a suit to enjoin the United 
States and officers of its Bureau of Reclamation from impound- 
ing water behind Friant Dam, part of the Central Valley Project 
in California, on ground that this action interfered with plaintiffs' 
rights to the use of the water downstream. The Supreme Court 
held that the United States had not consented to this kind of 
suit despite the McCarran Amendment, 43 U.S.C. § 666, and 
that the suit against the Reclamation officers must be dismissed 
as in substance one against the United States. To enjoin storage 
of water would require the abandonment of much of the project 
and "the Government would, indeed, be 'stopped in its tracks' " ; 
to order construction of subsidiary dams to meet the plaintiffs' 
needs would "not only 'interfere with the public administration' 



208 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

but also 'expend itself on the public treasury.' " The only exceptions 
to the rule against suits producing these effects, as announced in 
Larson and Malone, were inapplicable, for the Government "had 
the power, under authorization of Congress, to seize the property 
of the respondents . . . , and this power of seizure was constitu- 
tionally permissible." 

Unlike the other recent Supreme Court opinions, the Dugan 
opinion did interpret and resolve the statute, holding that Con- 
gress had authorized physical seizure of the water and limited 
affected persons to damage actions under the Tucker Act. More- 
over, this conclusion is supported by the practical interference 
with reclamation projects that would result if the contrary argu- 
ment had been accepted. 

The language of the Dugan opinion, however, like that of 
Hawaii v. Gordon and Malone v. Bowdoin, goes beyond this nar- 
row ground, suggesting that sovereign immunity is applicable 
whenever "the judgment sought would expend itself on the public 
treasury or domain, or interfere with the public administra- 
tion, ... or if the effect of the judgment would be 'to restrain 
the government from acting or compel it to act.' " As Professor 
Davis has stated, "This so-called general rule never has been the 
general rule and is not likely to become the general rule. Judg- 
ments of courts have often expended themselves on the public 
treasury or domain, have often interfered with the public ad- 
ministration, and have often restrained the government from act- 
ing or compelled it to act, and judgments of courts will surely 
continue to do these things in the future." Davis, Administrative 
Law Treatise § 27.01 (1965 Pocket Part, p. 149). 

III. Objectives of the Committee's Recommendation 

As the foregoing recital indicates, the Supreme Court has been 
remarkably receptive to the sovereign immunity doctrine in re- 
cent years. The Court now seems to regard it as settled that the 
general contours of the doctrine were established in Larson v. 
Domestic & Foreigyi Commerce Corp., 337 U.S. 682 (1949). Since 
there is no discernible pressure for change emanating from the 
Supreme Court, the impetus for reform must come from Con- 
gress. Important questions of policy, calling for legislative judg- 
ment, are involved and a legislative approach to the problem is 
not only appropriate but desirable. 

Dissatisfaction with the present doctrine of sovereign immu- 
nity is widespread. Professors Byse and Davis have argued per- 
suasively that the sovereign immunity doctrine constitutes a bar- 



REC. 9. SOVEREIGN IMMUNITY 209 

rier to proper judicial analysis; each has proposed a remedial 
statute. Byse, Proposed Reforms in Federal "Nonstatutor^y" Ju- 
dicial Review: Sovereign Immunity, Indispensable Parties, Man- 
damus, 75 Harv. L. Rev. 1479 (1962) ; Davis, 3 Administrative 
Law Treatise c. 27 (1958 and 1965 Pocket Part). Professor Jaffe 
has demonstrated the flimsiness of the doctrine's historical under- 
pinnings and agreed with Byse and Davis that legislative reform 
is desirable. Jaffe, Judicial Control of Administrative Action 
197-98, 213-31, and n. 123 (1965). Milton Carrow, a prolific 
writer on administrative law subjects, concludes that "The doc- 
trine of sovereign immunity has long fulfilled the requirements 
for 'full abandonment.' " Carrow, Soveign hnmunity in Admin- 
istrative Laiv — A Neiv Diagnosis, 9 J. of Pub. L. 1, 22 (1960). 
He quotes Professor Walter Gellhorn as stating that 

"today the doctrine may be satisfactory to technicians but not at all to 
persons whose main concern is with justice. . . . The trouble with the 
sovereign immunity doctrine is that it interferes with consideration of 
practical matters, and transforms everything into a play on words." 

Professor David Currie, in a recent article, states that "some- 
day Congress should . . . make a more rational and more liberal 
reconciliation of individual protection and government elbow- 
room in suits to enjoin federal ofl^cers than that established by 
the benighted Larson decision and its sequels." Currie, The Fed- 
eral Courts and the American Law Institute (Part II), 36 U. Chi. 
L. Rev. 268, 290 (1969). No scholar, so far as can be ascertained, 
has had a good word for sovereign immunity for many years. 

This rare unanimity of legal scholarship, however, has not 
been echoed in court opinions except for recurrent admissions 
that the subject is a confusing one and that it is not "an easy 
matter to reconcile all of the decisions of the Court in this class 
of cases." See Cunningham v. Macon & Brunswick R.R. Co., 109 
U.S. 446, 451 (1883); Brooks v. Dewar, 313 U.S. 354, 359-60 
(1941) ; Malone v. Bowdoin, 369 U.S. 643, 646 (1962). Judicial 
dissatisfaction with current law was expressed by Judge Brown 
in his recent opinion in Gardner v. Harris, 391 F.2d 885 (5th 
Cir. 1968), holding reluctantly that sovereign immunity barred 
a landowner's claim that a federal officer was wrongfully denying 
him access to his land : 

"With so much done ... to give the citizen access to a home-based Federal 
Court, frequently in cases that involve millions of dollars or which affect 
comprehensive programs, the persistence with which the Government 
successfully asserts immunity as to property claims . . . [is] unusual. 
. . . [T]hat Congress does not ameliorate these hardships appears 



210 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

even more unusual. . . . And not even equity — the King's conscience — 
can help." 391 F.2d at 886-87 and n 3. 

The Committee on Judicial Review has given careful consider- 
ation to the sovereign immunity problem. The Committee decided 
to study the problem at one of its early meetings in 1968. During 
the summer of 1968 the Committee's consultant interviewed 
lawyers in five federal departments that have had considerable 
experience with sovereign immunity cases: the Departments of 
Justice, Treasury, Agriculture, Interior, and Health, Education 
& Welfare. In September 1968 the Committee asked the Depart- 
ment of Justice to comment informally on the Byse and Davis 
proposals. Helpful memoranda expressing individual rather than 
official viewpoints were prepared for the Committee's use by the 
Solicitor General and by the Assistant Attorneys General in 
charge of the Civil Division and the Land & Natural Resources 
Division. Later in 1968 the Committee consultant prepared a 
memorandum on sovereign immunity for the Committee. An- 
other memorandum on the subject, prepared by Professor Davis 
for an American Bar Association committee, was also made avail- 
able to the Committee. On December 13, 1968, the chief legal of- 
ficers of six federal departments (Treasury, Defense, Post Office, 
Agriculture, Interior, and Health, Education & Welfare) were 
asked to comment on a specific legislative proposal. Informal re- 
sponses were received from four of the six departments. In May 
and July of 1969 the Committee submitted its present proposal 
(subsequently changed in minor particulars) to the Department 
of Justice for advice and comment. Helpful advice and comment 
was received from many individual lawyers in the Department 
of Justice, from Judge Oscar Davis of the Court of Claims, and 
from Professors Byse and Davis. In struggling with matters that 
the Committee has found to be difficult and complex, the co- 
operation and assistance noted above has proved invaluable. Need- 
less to say, none of the individuals or groups listed are responsible 
for — nor do they necessarily agree with — the conclusions that 
the Committee has reached. 

The Committee's recommendation is designed to achieve five 
objectives: (1) to eliminate the artificialities, uncertainties, and 
occasional injustices of the present case law; (2) to provide a 
local remedy for the resolution of land disputes between the 
United States and private persons; (3) to allow the United States 
to be named as defendant in cases challenging governmental ac- 
tion and to bind the United States by the judgment in an action 
against an officer when the action challenges official conduct and 



REC. 9. SOVEREIGN IMMUNITY 211 

the Attorney General has controlled the defense; (4) to retain 
present limitations on the availability and scope of judicial re- 
view, thus preventing unwarranted judicial interference with 
governmental programs; and (5) to retain the present exclusions 
on the availability of monetary or alternative relief that are 
embodied in such statutes as the Tucker Act and the Federal 
Tort Claims Act. Each of these objectives will be considered on 
the following pages. 

A. Eliminate Artificialities, Uncertainties 
and Injustices of Present Law 

The ideal of a government under law can be realized only if 
persons are provided with an adequate set of judicial remedies 
against that government, its officials, and its agencies. Earlier 
portions of this report have argued that remedies against the 
United States are impeded by the unsatisfactory case law re- 
lating to the doctrine of sovereign immunity — law that is con- 
fused, illogical, and sometimes leads to unjust results. There is 
need for a limited statutory reform that will 

"rid the law or sovereign immunity of the artificialities and rationaliza- 
tions, particularly those expressed in the Larson case, that have produced 
an irreconcilable body of case law and have permitted — indeed perhaps en- 
couraged — courts to avoid the difficult task of determining whether, in 
light of all the relevant considerations, the purposes of the applicable 
substantive statute would better be served by granting or by denying ju- 
dicial review." Byse, Proposed Reforms in "Nonstatutory" Judicial Re- 
view, 75 Harv. L. Rev. 1479, 1525 (1962). 

Part (1) of the Committee's recommendation, by prohibiting 
dismissal of certain actions on the ground that the action was in 
substance against the United States or that the United States was 
an indispensable party, withdraws sovereign immunity as a de- 
fense in certain actions challenging the legality of federal ad- 
ministrative behavior. Suits challenging official action or non- 
action, and seeking relief other than money damages, should not 
be barred by sovereign immunity. The explicit exclusion of mone- 
tary relief makes clear that sovereign immunity is abolished only 
in actions for specific relief (injunction, declaratory judgment, 
mandatory relief, quiet title, and ejectment). Thus the limitations 
on monetary relief contained in the Federal Tort Claims Act, 
the Tucker Act or similar statutes are unaffected. The consent 
to suit is also limited to claims in federal courts; hence the 
United States would remain immune from suit in state courts. 
The waiver of immunity extends only to actions challenging the 



212 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

legality of federal action (or non-action) ; it would not extend to 
proceedings in which federal officers or agencies are not acting in 
their "official capacity or under color of legal authority." This 
language is taken from 28 U.S. C. § 1391(e), which would govern 
venue and service of process in actions falling within the purview 
of the recommendation. 

Although the recommendation does not use the term "spe- 
cific relief," the principal effect of the amendment will be to cut 
off the defense of sovereign immunity in suits for specific relief. 
Perhaps ninety percent of the cases affected will be suits for 
injunction or declaratory judgment or for both, and perhaps 
most of the rest will be suits for relief in the nature of mandamus. 
But all other specific relief is covered, including specific per- 
formance, quieting title, ejectment and habeas corpus. All forms 
of monetary relief, however, are excluded from the recommenda- 
tion. 

The recommendation is cast in the form of an amendment to 
the judicial review provisions of the Administrative Procedure 
Act, 5 U.S.C. §§ 701-706, rather than as an amendment to 
Chapter 161 of the Judicial Code, 28 U.S.C, which is concerned 
with actions in which the United States is a party. This choice 
limits the effect of the recommendation in important respects : 

First, an APA amendment is subject to the exceptions con- 
tained in 5 U.S.C. § 701, as well as the exclusions specified in a 
number of other statutes. The § 701 exceptions include the Con- 
gress, the federal courts, territorial governments. District of 
Columbia government, labor mediation boards, certain military 
functions, and certain wartime and emergency functions. Other 
statutes that contain provisions exempting a function from the 
judicial review sections of the APA include the following: export 
of scarce materials (50 App. U.S.C. § 2027) ; selective service 
proceedings (50 App. U.S.C. § 463(b)); employment and dis- 
charge of National Security Agency personnel (50 U.S.C. § 835) ; 
renegotiation of defense contracts (50 App. U.S.C. § 1221) ; 
certain mine inspection functions (30 U.S.C. § 483) ; and certain 
water resource land acquisition functions (33 U.S.C. § 597). The 
question is whether these indications of congressional desire to 
foreclose judicial review should be fully respected or whether the 
abolition of sovereign immunity should be used as a vehicle for 
providing specific relief in situations in which Congress has 
placed a function outside of the provisions of the APA (assuming 
that no other barrier to specific relief exists). The Committee's 
view is that the category of reviewable action should not be 



REC. 9. SOVEREIGN IMMUNITY 213 

broadened in this manner. Retention of the APA exceptions, 
unless and until they are abandoned as a general matter, is more 
consistent with the nai-row purposes of our proposal. 

Incorporation of the reform proposal in the judicial review 
provisions of the APA has a second advantage. As is evident from 
prior discussion, abolition of sovereign immunity cannot be con- 
sidered except in relation to the general law governing the avail- 
ability and scope of judicial review. That law is now codified in 
5 U.S.C. §§ 701-06; and incorporating the abolition of sovereign 
immunity in §§ 702 and 703 draws on the broader context. The 
whole matter, for example, is clearly subject to the prefatory 
language of §701 (a), "except to the extent that — (1) statutes 
preclude judicial review; or (2) agency action is committed to 
agency discretion by law." The same conclusion would probably 
be reached in any event, but the APA context lends clarity to 
the limited nature of the proposal. 

The only valid office served by sovereign immunity — prevent- 
ing undue judicial interference with governmental programs that 
should not be subjected to judicial review — would be performed 
by the more discriminating and intelligible doctrines governing 
the availability of judicial review, especially the nonreviewability 
of action expressly or impliedly precluded from review or com- 
mitted to agency discretion, and by the equitable considerations 
that control the grant of specific relief. 

An argument occasionally made in defense of sovereign im- 
munity is that it has been so undermined by the suit against 
the officer that, except in cases involving treasury liability for 
damages or the disposition of government property — cases per- 
haps deserving of special treatment — it no longer serves as a 
barrier to judicial review. It is true that lawyers and judges 
who have had considerable experience with sovereign immunity 
usually have little difficulty in sidestepping sovereign immunity 
in situations in which governmental regulatory or enforcement 
activity is challenged. These lawyers read Larson narrowly as 
essentially concerned with the forced disposition of property 
held by the Government where the particular conduct of of- 
ficial, though it may be tortious or wrongful toward the private 
claimant, is authorized by the statute. So read, Larson does not 
stand in the way of the suit against an officer engaged in a regu- 
latory or enforcement activity not involving government prop- 
erty, where the claim is that the officer is acting unlawfully. 

This narrow reading of Larson, even if correct, is by no means 
universally accepted. In part II of this report some of the many 



214 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

cases in which the broader Larson formulations have led lower 
courts astray were discussed. Narrower and more refined formu- 
lations are necessary; and legislation is probably required to do 
the job. 

It should be emphasized that the application of the artificial- 
ities of Larson is not restricted to cases involving government 
property or funds. The cases discussed on pp. 11-12, supra, in- 
volve regulatory matters, not government property or funds. A 
partial sampling of recent cases reveals that sovereign immunity 
has been a serious issue in numerous suits challenging govern- 
ment regulatory and enforcement activity: 

Agriculture regulation: Garvey v. Freeman, 263 F.Supp. 573 (D. 
Colo. 1967), aff'd 397 F.2d 600 (10th Cir. 1968) (sovereign immunity did 
not bar judicial review of determination of normal wheat yields per 
acre) ; Gregory v. Freeman, 261 F.Supp. 362 (N.D.N.Y. 1966) (sovereign 
immunity barred claim that officials had erred in determining that peti- 
tioner was not in compliance with feed grain program) ; Moon v. Free- 
man, 245 F.Supp 837 (E.D.Wash. 1965), aff'd on other grounds, 379 F.2d 
382 (9th Cir. 1962) (Sovereign immunity barred suit by wheat proc- 
essors to enjoin wheat marketing export program to recover funds al- 
ready paid). 

Food and drug regulations : American Dietaids Co., Inc. v. Celebreeze, 
317 F.2d 658 (2d Cir. 1963) (sovereign immunity barred action to re- 
cover tapes of a concealed tape recorder used by FDA inspectors during 
an inspection); Durovic v. Palmer, CCH FDC Law Reports ^ 40,099 
(N.D.Ill.), aff'd on other grounds, 342 F.2d 634 (7th Cir. 1965) (sover- 
eign immunity barred suit to enjoin FDA inspection of facility produc- 
ing Krebiozen) ; Toilet Goods Ass'n, Inc. v. Gardner, 360 F. 2d 677, 683 
(2d Cir. 1966), aff'd on other grounds, 387 U.S. 158 (1967) (sovereign 
immunity does not bar a pre-enforcement challenge by domestic manu- 
facturers of FDA color additive regulations) ; Sugarman v. Forbragd, 
267 F.Supp. 817 (N.D.Cal. 1967) (sovereign immunity barred challenge 
of FDA determination that coffee beans could not be imported). 

Administration of federal grant-in-aid programs: Lee County School 
Dist. No. 1 V. Gardner, 263 F.Supp. 26 (D.S.C. 1967) (sovereign immu- 
nity did not bar challenge of HEW deferral of payment of federal funds 
to school district) ; Dermott Special School District v. Gardner, 278 
F.Supp. 687 (E.D.Ark. 1968) (sovereign immunity did not bar school dis- 
trict's challenge of HEW guidelines establishing requirements for feder- 
ally aided programs) . Cf . Congress of Racial Equality v. Social Security 
Administration 270 F.Supp. 537 (D.Md. 1967) (suit to require agency 
to establish an admininstrative procedure pursuant to an executive order 
concerning equal opportunity in federal employment barred by sovereign 
immunity) . 

Subversive activities: Kennedy v. Rabinowitz, 318 F.2d 181 (D.C. Cir. 
1963), aff'd on other grounds, 376 U.S. 605 (1964) (sovereign immunity 
barred action by attorneys representing Cuba for a declaration that For- 
eign Agents Registration Act did not require them to register) ; In- 



REC. 9. SOVEREIGN IMMUNITY 215 

dust rial Workers of World v. Clark, 385 F.2d 687 (D.C. Cir. 1967) (sov- 
ereign immunity did not bar organization's challenge to its listing in 
"Attorney General's List"). 

Enforcement of Fair Labor Standards Act: Wohl Shoe Co. v. Wirtz, 
246 F.Supp. 821 (E.D.Mo. 1965) (sovereign immunity barred action 
seeking a declaration that employer, warned by officers that it was vio- 
lating the Act, was within designated exemptions) ; Capital Coal Sales v. 
Mitchell, 164 F.Supp. 161 (D.D.C. 1958), aff'd 282 F.2d 486 (D.C. Cir. 
1960) (sovereign immunity did not bar challenge of blacklisting of gov- 
ernment contractor for alleged violation of Walsh-Healey Act) ; Rogers 
V. Skinner, 201 F.2d 521 (5th Cir. 1953) (sovereign immunity barred 
action to determine whether plaintiff's employees were covered by 
FLSA) ; Interstate Reclamation Bureau v. Rogers, 103 F.Supp. 205 
(S.D.Tex. 1952) (same). 

Government employment: Leber v. Canal Zone Central Labor Union, 
383 F.2d 110 (5th Cir. 1967), rev'g 246 F.Supp. 998 (D.Canal Zone 
1965) (attack on regulations decreasing overseas differential pay barred 
by sovereign immunity) ; Manhattan-Bronx Postal Union v. Gronouski, 
350 F.2d 451 (D.C. Cir. 1965) (sovereign immunity barred suit challeng- 
ing Postmaster General's refusal to recognize the plaintiff union as ex- 
clusive bargaining representative of certain postal employees) ; Mulry v. 
Driver, 366 F.2d 544 (9th Cir. 1966) (validity of Veteran Administra- 
tion regulation prohibiting physicians, dentists and nurses from engag- 
ing in outside practice; since regulation was authorized, sovereign im- 
munity barred suit). See also American Guaranty Corp. v. Burton, 380 
F.2d 789 (1st Cir. 1967) (sovereign immunity barred a challenge of the 
validity of a regulation fixing the fees for salaries and expenses of refer- 
ees in bankruptcy) . 

Parcel post rates: Doehla Greeting Cards, Inc. v. Summerfield, 227 
F.2d 44 (D.C. Cir. 1955) (sovereign immunity barred challenge of 
validity of increased parcel post rates) ; Summerfield v. Parcel Post As- 
sociation, 280 F.2d 673 (D.C. Cir. 1960) (same). 

Tax investigations: ReisTnan v. Caplin, 317 F.2d 123 (D.C. Cir. 1963), 
aff'd on other grounds, 375 U.S. 440 (1964) (sovereign immunity barred 
suit by taxpayer's attorneys seeking injunctive and declaratory relief 
from an IRS summons calling for production of allegedly privileged mat- 
ter, including the workproduct of the attorneys) ; Balistrieri v. Ujiited 
States, 303 F.2d 617 (7th Cir. 1962) (sovereign immunity barred tax- 
payer from obtaining a declaration that he was entitled to examine docu- 
ments relevant to tax liability which IRS had subpoenaed from an 
accountant) ; Smith v. United States, 250 F.Supp. 803 (D.N.J. 1966) 
(sovereign immunity did not bar taxpayer's motion to suppress evidence 
obtained from them by IRS agent, allegedly in violation of constitutional 
rights). 

The catalog above is an illustrative rather than exhaustive 
list of recent regulatory and enforcement cases in v^^hich the 
government has urged dismissal — often successfully — on sover- 
eign immunity grounds. Cases in other fields, involving such 
matters as rural electrification loans, welfare benefits, federal 
alcohol regulation, correction of military records, and a number 



216 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

of other subjects, might also be cited. Indeed, the Department of 
Justice appears to assert sovereign immunity, usually as one of 
a number of grounds for dismissal of the plaintiff's complaint, 
in a substantial portion of the cases involving nonstatutory re- 
view of federal administrative action. Only if tradition or hold- 
ings make it clear that the suit against the officer is an appro- 
priate form of judicial revievi^, as in the case of Post Office fraud 
orders, is the defense not asserted. This practice was recently 
criticized by Judge Friendly in Toilet Goods Ass'n v. Gardner, 
360 F.2d 677, 683 n. 6 (2d Cir. 1966), aff'd 387 U.S. 158 (1967) : 

"[The Government makes] the surprising contention that an action for 
declaration that federal regulatory officers have acted in excess of their 
authority constitutes an uncontested suit against the United States. . . . 
[L]aw officers of the Government ought not to take up the time of 
busy judges or of opposing parties by advancing an argument so plainly 
foreclosed by Supreme Court decisions." 

One wonders whether the confusion in the case law does not lead 
district judges, less familiar with the intricacies of nonstatutory 
judicial review than Judge Friendly, to deny a hearing on the 
merits to some litigants who should receive it. 

No claim is made, of course, that each of the cases in which 
sovereign immunity has been invoked reached an unjust result. 
Alternative grounds for dismissal were mentioned or were present 
in many of these cases; and it is likely that the government 
would have prevailed in most of the cases if the merits had 
been reached. But it cannot be asserted with confidence that all 
of the results were just; some meritorious claims may have 
been rejected out-of-hand by dismissals based on sovereign im- 
munity grounds. 

It is time to reassert the fundamental proposition stated in 
United States v. Lee, 106 U.S. 196, 220 (1882) : 

"Courts of justice are established, not only to decide upon controverted 
rights of the citizens as against each other, but also upon rights in con- 
troversy betvi^een them and the government. . . ." 

B. Provide Specific Relief in Cases Involving Public Land 

Sovereign immunity has played a large role in cases involving 
the use or disposition of land claimed by the United States. 
The Committee's recommendation is intended to provide a local 
judicial remedy in two related but distinct situations: (1) 
judicial review of administrative determinations involving public 
land questions; and (2) property disputes between the United 
States and private persons. 



REC. 9. SOVEREIGN IMMUNITY 217 

1. Judicial review of admiyiistrative determinations in the 
public land field. Unlike more recently created administrative 
agencies, the older administrative activity involved in the 
use or disposition of public lands is not subject, vv^ith rare ex- 
ceptions, to specific statutory review provisions. Consequently, a 
litigant challenging an administrative determination in the public 
land field is required to seek "nonstatutory" review under the 
general law governing the federal judicial system. In order to 
avoid the sovereign immunity doctrine, the suit must be brought 
against the official rather than against the government itself by 
name. But even that may not suffice when the judgment sought 
would directly provide for the disposition of government prop- 
erty. Larson v. Domestic & Foreign Commerce Corp., 337 U.S. 
682 (1949). A literal application of this prohibition would fore- 
close all suits against public land officials, a result that would be 
unjust as well as inconsistent with a long history of limited 
judicial review in the public land area. See, e.g., West Coast Ex- 
ploration Co. V. McKay, 213 F.2d 582 (D.C. Cir. 1954) ; Clackamas 
County V. McKay, 219 F.2d 479 (D.C. Cir. 1954), vacated as 
moot, 349 U.S. 909 (1955), The absence of statutory review pro- 
visions also has created pressure to view § 10 of the Adminis- 
trative Procedure Act as a jurisdictional provision and as a con- 
sent to suit. Adams v. Witmer, 271 F.2d 29 (9th Cir. 1959). The 
result is a great deal of confusion. A recent study of "Adminis- 
trative Procedures and the Public Lands," prepared for the Public 
Land Law Review Commission by a group of scholars headed 
by Professor McFarland of the University of Virginia, stated 
that: 

". . . suits in the nature of review actions [against public land officials] 
often have been permitted. . . . When they are permitted notwithstand- 
ing, and when forbidden because of, the sovereign immunity doctrine is 
admittedly difficult if not impossible to determine on the basis of the 
court opinions. . . . [T]he precedents baffle lawyers, tempt government 
counsel, and feed the despair of commentators." [Pp. 187-88. Footnotes 
omitted. Footnote 279 adds that "Despite Larson ... no pulbic land case 
of the traditional type has been decided by the Supreme Court on the 
basis of sovereign immunity."] 

The study concludes that "a simple statutory affirmation of the 
right to court review would seem to be a dire necessity and 
should pose no threat to legitimate public land administration." 
(P. 305.) The report cautions that "because court review is 
severely limited at best," under the general law of judicial re- 
view codified in the Administrative Procedure Act, abolition of 
sovereign immunity will not be "disruptive, costly, and time con- 



218 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

suming in operation. But it could operate to firm up admin- 
istrative procedures, instill confidence in those who have or seek 
rights to develop public land resources, and afford at least a 
theoretical protection for the small operator who traditionally 
has difl^culty in dealing with oflicialdom." (Pp. 305-06.) 

Although the Public Land Law Review Commission will not 
submit its final report until mid-1970, there is every indication 
that the Commission will accept the recommendations of its 
study staff. The Committee's recommendation will effectuate this 
highly desirable reform. 

2. Property disputes between the United States and private 
persons. Federal law does not contain any general provision 
authorizing quiet title suits involving land claimed by the United 
States. In the absence of such a provision, attempts to obtain 
specific relief against the federal ofl^cer in possession of disputed 
land have foundered on the sovereign immunity doctrine. Malone 
V. Bowdoin, 369 U.S. 643 (1962), discussed extensively at pp. 
15-18, supra, invoking sovereign immunity to bar a suit to try 
title, denies specific relief to the private landowner, leaving him 
a damage remedy for an unconstitutional "taking" under the 
Tucker Act. 

The Committee believes that specific relief (injunction or dec- 
laratory judgment) is appropriate in these land dispute cases. 
The uniqueness of land is a factor favoring specific relief and 
distinguishing this situation from other property situations (the 
coal involved in the Larson case had no unique or unusual qual- 
ities; hence money damages was a totally adequate remedy). The 
nonstatutory suit for specific relief may be brought in the dis- 
trict court where the land is located, 28 U.S.C. § 1391(e), pro- 
viding the landowner with an easily accessible and inexpensive 
local forum (the Court of Claims has exclusive jurisdiction of 
the claim for money damages if the value of the property ex- 
ceeds $10,000). The issues likely to be involved in these cases, a 
blend of state land law and federal statutory law, are peculiarly 
appropriate for judicial determination. 

Moreover, the government should adhere to prescribed proc- 
cesses of decision-making in exercising, whether in form or sub- 
stance, the power of eminent domain. In some situations, such as 
that involved in Simons v. Vi7ison, 394 F.2d 732 (5th Cir. 1968), 
in which sovereign immunity was held to bar a claim of accreted 
land formed along a river which divided land owned by the 
United States from that of the plaintiffs', eminent domain may 
be inapplicable because no public use could be shown— appar- 



REC. 9. SOVEREIGN IMMUNITY 219 

ently the government's only purpose was to collect royalties from 
oil produced on the disputed land. In other cases, such as Malone 
itself or Gardner v. Harris, 391 F.2d 885 (5th Cir. 1968), where 
the disputed land was part of a larger parcel devoted to a public 
purpose, eminent domain is available if the land found to belong 
to the claimant is desired by the United States. Is it too much 
to ask that condemnation of private land be accomplished in ac- 
cordance with the policies and procedures established by Con- 
gress, rather than by the unilateral decision of a government of- 
ficer, perhaps a subordinate one, in claiming the land or taking 
possession of it? 

A partial abolition of sovereign immunity would open the door 
to suits for injunctive or declaratory relief in land dispute cases, 
at least in situations where the plaintiff frames his complaint 
so as to meet federal-question requirements (enjoining what 
would otherwise be an unconstitutional taking of private prop- 
erty). See White v. Sparkhill Realty Corp., 280 U.S. 500 (1930), 
stating that a suit to enjoin unconstitutional conduct comes with- 
in the federal-question jurisdiction but an ejectment complaint, 
"without anticipating possible defenses, would not present a case 
arising under the Constitution or a treaty or law of the United 
States." Because of jurisdictional problems (even suits stating a 
federal question would need to satisfy the $10,000 minimum jur- 
isdictional amount of 28 U.S.C. § 1331) and because some pro- 
cedural aspects of quiet title suits deserve special treatment, an 
amendment to the Judicial Code authorizing quiet title proceed- 
ings in federal district courts to resolve land disputes between 
the United States and private persons is probably desirable in 
addition to the recommendation proposed at this time. 

The Committee has encountered little opposition to its view 
that federal courts should be authorized to resolve land disputes 
involving the United States. The McFarland report to the Public 
Land Law Review Commission, for example, stated that "There 
seems to be somewhat general agreement that there should be 
statutory provision for suits to try title. . . ." (P. 305.) There 
is gamesmanship involved in getting federal officials to take the 
initiative in bringing court suits — the only present method of 
circumventing sovereign immunity. Sometimes government law- 
yers are unwilling to take this step merely because they do not 
want to shoulder the plaintiff's burdens ; the ability of the private 
claimant to initiate suit would remedy that problem. Remedial 
legislation on this subject has been drafted by the Department 



220 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

of Justice but has thus far not received priority on the de- 
partment's legislative program. 

C. Alloiv the United States To Be Named as Defendant in Cases 
Challenging Government Action 

Actions challenging official conduct are intrinsically against 
the United States. Clarity is served by allowing the plaintiff to 
name the United States as a defendant in such actions. Part (1) 
of the recommendation withdraws the defense of sovereign im- 
munity in actions not seeking monetary relief in which the 
legality of federal administrative action is challenged. The plain- 
tiff is permitted but not required to name the United States a 
defendant. 

Moreover, the recommendation provides that "judgment or 
decree may be entered against the United States whether or not 
the United States is named as a defendant" in an action of the 
type permitted by the recommendation. When the Attorney Gen- 
eral or other authorized legal officers of the United States defend 
an officer or agency acting in his official capacity or under color 
of legal authority, the United States should be bound by the re- 
sulting judgment or decree to the extent that and in the manner 
that it would be if it had been named as a party. 

Part (2) of the Committee's recommendation allows a non- 
statutory review action to be brought "against the United States, 
the agency by its official title, or the appropriate officer" In- 
sertion of this sentence in 5 U.S.C. §703, dealing with the 
"form and venue of [review] proceedings makes it clear that 
the form and venue of existing statutory review proceedings is 
unaffected. Thus if a "special statutory review proceeding" pro- 
vides for exclusive jurisdiction in a particular court, a form of 
proceeding, and special venue, such provisions must be complied 
with. Only if no special statutory review proceeding is appli- 
cable may a nonstatutory review proceeding be brought "against 
the United States, the agency by its official title, or the ap- 
propriate officer." 

There are three reasons for allowing the United States to be 
named as defendant in nonstatutory review actions: (1) to avoid 
the frictional subtleties of the suit against the officer; (2) to 
eliminate the possibility that an otherwise meritorious claim 
could be defeated on the technicality that a wrong defendant was 
named; and (3) to insure that the resulting judgment is binding 
on the United States. 

1. Fictional character of the suit against the officer. The suit 



REC. 9. SOVEREIGN IMMUNITY 221 

against the officer, challenging his official conduct, served a useful 
purpose as a device for circumventing the sovereign immunity 
doctrine. Once sovereign immunity is tamed, however, requiring 
the plaintiff to cast his suit in the form of a suit against the 
officer performs no useful function. The fictional character of 
the suit against the officer is merely misleading and deceptive. 
Everyone recognizes that the suit is in fact against the United 
States, or one of its agencies, and involves the legality of govern- 
mental action.^ 

2. Technicalities of the law of parties defendant. Requiring 
the plaintiff to sue an officer, when everyone recognizes that the 
action is against the United States, perpetuates some troublesome 
technicalities of the law of parties defendant. Even though Rule 
25(d) of the Federal Rules of Civil Procedure provides that 
"When a public officer sues or is sued in his official capacity, he 
may be described as a party by his official title rather than by 
name," courts occasionally dismiss because the wrong officer was 
named, other officers were not joined, or service of process was 
made on an agency i-ather than the officer. See, e.g., Congress of 
Racial Equality v. Commissioner, 270 F.Supp. 537, 542 (D.Md. 
1967) (action against the chairman of the Civil Service Commis- 
sion dismissed because the other commissioners were indispens- 
able parties) ; Bell v. Groak, 371 F.2d 202 (7th Cir. 1966) (service 
made on Commission rather than upon e:ach commissioner). Al- 
lowing the plaintiff to sue the officer, the agency by name, or 
the United States should eliminate decisions on such technical 
procedural grounds. If the plaintiff names the United States as 
defendant, process would be served in accordance with Rule 4(d) 
(4) of the Federal Rules of Civil Procedure — by delivery to the 
United States attorney for the district in which the action is 
brought, with a copy mailed to the Attorney General, and "in 
any action attacking the validity of an officer or agency of the 
United States not made a party, by also sending a copy of the 
summons and of the complaint by registered mail to such officer 
or agency." 



* The essentially nonpersonal nature of the nonstatutory review action is ronognizetl explicitly 
in connection with the "substitution" of successors where a defendant official "sued in his 
official capacity" dies or resigns. At the trial level since 1961 "his successor is automatically 
substituted as a party" and "he may be described as a party by his official title rather than by 
name." Rule 2o(d), Federal Rules of Civil Procedure; and see also the similar Rules 48(a) and 
(4) of the Supreme Court Rules and Rule 43(c) of the Federal Rules of Appellate Procedure 
for the Courts of Appeals. Although the rule speaks in terms of public officials sued in their 
"official capacity," the Notes of the Advisory Committee on Rules concerning the basic 1961 Rule 
describe it as one applicable "to any action brought in form against a named officer, but 
intrinsically against the government or the office or the incumbent thereof," and state that it is 
designed to "encourage the use of the official title without any mention of the officer individually, 
thereby recognizing the intrinsic character of the action." 



222 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

3. Binding effect of judgments. The theory of the officer's suit 
is that the officer, by acting unconstitutionally or in excess of his 
authority, is no longer acting in his official capacity, and hence 
may be enjoined in his personal capacity. This fiction allowed 
circumvention of sovereign immunity, but raised questions con- 
cerning the binding effect of the judgment on the United States, 
which was not and could not be made a party. A long line of 
cases states the rule that the United States is not bound by a 
judgment in an unconsented m personam action against one of 
its officers. See Carr v. United States, 98 U.S. 433 (1878) ; 
Hussey v. United States, 222 U.S. 88 (1911); Sunshine Coal 
Co. V. Adkijis, 310 U.S. 381, 402-03 (1940) ; but cf. United States 
V. Candelaria, 271 U.S. 432, 444 (1926) (United States bound by 
a judgment when its lawyers controlled the litigation). Moreover, 
sovereign immunity is an objection that is available on collateral 
attack even if government lawyers did not raise it in an earlier 
proceeding. United States v. United States Fidelity & Guarantee 
Co., 309 U.S. 506 (1940). Government counsel now ordinarily de- 
fend even personal actions against federal officers arising out of 
their official duties. It is unconscionable that the United States 
not be precluded by a judgment in a litigation in which its 
interests are involved and in which it has controlled the defense. 
The recommendation, by providing that "a judgment or decree 
may be entered against the United States whether or not the 
United States has been named a defendant" draws on general 
principles of res judicata and insures that the United States will 
be bound by the judgment when it has controlled the defense in 
a suit against an officer. 

D. Law Other Than Sovereign Immunity Unchanged 

The Committee's recommendation, after forthrightly abolish- 
ing sovereign immunity as a defense in nonstatutory review ac- 
tions, provides that 

"Noting herein (1) affects other limitations on judicial review or the 
power or duty of the court to dismiss any action or deny relief on any 
other appropriate legal or equitable ground; . . . ." 

This important protective language insures that the abolition 
of sovereign immunity will not result in undue judicial interfer- 
ence with governmental operations or a flood of burdensome 
litigation. Grounds for dismissal or denial of relief under present 
law include but are not limited to : 

(1) The plaintiff's lack of standing {e.g., Perkins v. Lukens 



REC. 9. SOVEREIGN IMMUNITY 228 

Steel Co., 310 U.S. 113 (1940); Pennsylvania R. Co. v. Dillion, 
335F.2d292 (D.C. Cir. 1964)). 

(2) The absence of a matured controversy (e.g., Internationxil 
Longshoremen's Union v. Boyd, 347 U.S. 222 (1954) ) . 

(3) The availability of an alternative remedy in another court 
{e.g., American President Lines, Ltd. v. Federal Maritime Board, 
235F.2dl8 (D.C. Cir. 1956)). 

(4) The express or implied statutory preclusion of judicial 
review {e.g., Schilling v. Rogers, 363 U.S. 666 (1960) (implied 
preclusion) ; Barefield v. Byrd, 320 F.2d 455 (5th Cir. 1963) 
(express preclusion) ) . 

(5) The commission of the matter by law to the defendant's 
discretion {e.g., Panama Canal Co. v. Grace Line, Inc., 356 U.S. 
309 (1958)). 

(6) The privileged nature of the defendant's conduct {e.g., 
Barr v. Matteo, 360 U.S. 564 (1959); United States v. Reyn- 
olds, S45V.S. 1 (1953)). 

(7) The plaintiff's failure to exhaust his administrative rem- 
edies {e.g., Myers v. Bethlehem Shipbuilding Corp., 303 U.S. 
41 (1938)). 

(8) The discretionary authority of a court to refuse relief 
on equitable grounds {e.g., Morrison v. Work, 266 U.S. 481, 490 
(1925)). 

As Professor Byse has commented : 

"None of these principles is precise or self-executing, and it is not diffi- 
cult to criticize the manner in which they have been applied in some 
instances. But unlike the sovereign immunity doctrine, they require or at 
least tend to require the court to direct attention to the considerations 
that are relevant to the question whether the action should be reviewed."' 
Rather than being able to rely upon the conceptualism of the Larson 
case or upon other 'empty fictions which have thus far largely controlled 
the application of the sovereign immunity doctrine in suits against gov- 
ernment officers,' the court would be forced to consider — and hopefully to 



"' "If, for example, the Larson case . . . had been decided under [a proposed statute 
abolishing sovereign immunity], the action could not have been dismissed on the ground that it 
was against the United States, or that the United States was an indispensable party. But the 
action might have been dismissed on the ground (1) that the plaintiff had an adequate legal 
remedy for money damages under the Tucker Act, or (2) that to allow suits for specific 
performance of contracts that are part of a national program to dispose of surplus war goods 
would constitute an unwarranted disruption of the government's sales program, or (3) that the 
statute in question gave the War Assets Administrator authority to make erroneous as well as 
correct determinations. Deciding the Larson case on any of these grounds would require the 
court to direct attention precisely to the considerations which are relevant to the issue whether 
the administrative action should be reviewed by the court. If the court should conclude (1) 
that the plaintiff did not have adetiuate legal remedy and (2) that specific performance of 
the contract would not unduly interfere with the program to dispose of surplus war supplies 
and (3) that the Administrator's authority did not extend to making erroneous decisions, I 
cannot see that any sound policy would be served by refusal to adjudicate the plaintiff's 
contentions." 



224 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

articulate in its opinion — precisely why relief should be granted or 
denied. Such a process not only should result in more intelligent decisions 
but should provide the profession with sounder bases for prediction and 
constructive criticism than are possible in the present morass. 

"Although I cannot pretend to an encyclopedic knowledge of govern- 
mental regulation or to the prescience needed to foretell judicial reaction 
to ingenious efforts of resourceful counsel to extend any statute to its 
utmost, I am confident that the various doctrines and principles that gov- 
ern the availability of judicial review are sufficiently comprehensive and 
flexible to prevent an undue increase in the availability of judicial review 
and to avoid improper judicial interference with federal regulatory 
action. . . ." Byse, Proposed Reforms m "Nonstatutory" Judicial Review, 
75 Harv. L. Rev. 1479, 1529-30 (1962). 

Special doctrines favoring the United States as a plaintiff are 
unaffected by the Committee's recommendation. The exemption 
of the United States from statutes of limitations is not based on 
sovereign immunity but on the separate ground that the public 
interest should not suffer because of the negligence of public 
officers. United States v. Summerlin , 310 U.S. 414 (1940). More- 
over, the Committee's recommendation is applicable to situations 
in which the action is against the United States, not to those in 
which the United States is a plaintiff. 

Nor does the Committee's recommendation affect the long- 
standing immunity of the United States from garnishment proc- 
ess. FHA V. Burr, 309 U.S. 242 (1940). In these cases, in 
which an employee of the United States allegedly owes money 
to a creditor, who attempts by means of state garnishment proc- 
ess to reach wages due the employee from the United States, 
the action does not involve a claim that "an agency or an officer 
or employee thereof acted or failed to act in an official capacity 
or under color of legal authority." Moreover, the action seeks 
money relief. 

Government lawyers who have expressed opposition to an ab- 
olition of sovereign immunity fear that two harmful consequences 
may result: (1) undue judicial interference with governmental 
programs; and (2) a flood of burdensome litigation causing ex- 
pense and inconvenience to the government. Although complete 
assurance on each of these matters is impossible, the Committee 
has reasons to believe that these in terrorem consequences will 
not result from an adoption of its proposal. 

1. Undue judicial interference ivith governmental 'programs? 
It must be borne in the mind that the sovereign immunity doc- 
trine became established about one hundred years ago, long be- 
fore the modern law of judicial review had developed. The courts 
at that time assumed that they must choose between performing 



REC. 9. SOVEREIGN IMMUNITY 225 

executive tasks and refusing review; it was understandable that 
they took the latter coui-se. With the development in the twentieth 
century of a sophisticated body of law governing the availability, 
scope and limits of judicial review, this choice is no longer 
presented. American experience amply demonstrates that a limit- 
ed judicial review of governmental actions produces fairer ad- 
ministrative procedures, sounder substantive results, and better 
government. 

The essential and sound policy underlying sovereign immunity — 
that courts should not engage in indiscriminate interference 
with governmental programs — is not abandoned merely because 
an artificial and outmoded doctrine is abolished. The same basic 
policy is inherent in the body of law that governs the avail- 
ability and scope of judicial review. The doctrine of sovereign 
immunity is unnecessary to prevent courts from (a) entering 
fields which the Constitution or Congress has delegated to the 
executive, and (b) displacing executive or administrative judg- 
ment. 

The Committee's recommendation is an amendment to the Ad- 
ministrative Procedure Act; and its clear language retains the 
existing limitations on the availability of judicial review. Section 
10 of the APA, now 5 U.S.C. § 701, provides that "This chapter 
applies . . . except to the extent that — (a) statutes preclude 
judicial review; or (2) agency action is committed to agency 
discretion by law." Sovereign immunity and unreviewability are 
two separate ideas; and unreviewability is clearly retained. Thus 
it is fanciful to suppose that abolition of sovereign immunity will 
allow the courts to decide issues about foreign afi'airs, military 
policy, and other subjects inappropriate for judicial action. Courts 
are not unaware of their capabilities and limits; much of the 
law of unreviewability consists of marking out areas in which 
legislative action or traditional practice indicate that courts are 
unqualified or that issues are inappropriate for judicial deter- 
mination. 

Several recent cases provide illustrations. In Luftig v. 
McNamara, 373 F.2d 664 (D.C. Cir. 1967), a serviceman sought to 
enjoin the Secretary of Defense from ordering him to Vietnam, 
claiming that American military action there was unconstitutional 
and illegal. In dismissing the action the court stated : 

"It is difficult to think of an area less suited for judicial action than 
that into which Appellant would have us intrude. The fundamental divi- 
sion of authority and power established by the Constitution precludes 
judges from overseeing the conduct of foreign policy or the use and dis- 



226 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

position of military power; these matters are plainly the exclusive prov- 
ince of Congress and the Executive." 373 F.2d at 665-66. 

The sovereign immunity doctrine, briefly mentioned as an al- 
ternative ground, was superfluous; the result would be the same 
in its absence. Similarly, the closing of a military facility (Arm- 
strong V. United States, 354 F.2d 648 (9th Cir. 1965)), the 
shift in location of a customs oflfice (Los Angeles Custom and 
Freight Brokers Ass'n v. Johnson, 277 F.Supp. 525 (C.D.Calif. 
1967)), the discontinuance of a post office (Sergeant v. Fudge, 
238 F.2d 916 (6th Cir. 1956)), and the like, are unreviewable 
because committed to agency discretion or otherwise inappropriate 
for judicial determination. 

Similarly, abolition of sovereign immunity will not expose gov- 
ernmental programs to indiscriminate judicial interference by 
injunction. The result in Dugan v. Rayik, 372 U.S. 609 (1963), 
discussed supra at pp. 19-20, would be unaffected by the Com- 
mittee proposal. The Court in Dugan interpreted the statutes 
under which the reclamation project was proceeding as authoriz- 
ing the seizure of private water rights and as confining the 
plaintiff to his claim for monetary relief under the Tucker Act. 
Monetary relief, the Court held, was intended to be the exclu- 
sive remedy. 

Where Congress has not expressly or impliedly precluded spe- 
cific relief, injunctive relief nevertheless will be denied if harm 
to public interests will result from such relief. The Committee's 
proposal does not affect the longstanding tradition that an equity 
court has to balance the interests of the parties in deciding what 
kind of relief is appropriate: 

"The court, in its discretion, may refuse ... to give a remedy which 
would work public injury or embarrassment . . . just as in sound discre- 
tion a court of equity may refuse to enforce or protect legal rights, the 
exercise of which may be prejudicial to the public interest." United 
States ex rel. Greathouse v. Dern, 289 U.S. 352, 360 (1933). 

See also § 10(d) of the APA, now 5 U.S.C. § 705. 

It is true that considerable discretion is inescapably vested in 
the judiciary, and the possibility of occasional error remains. 
But this is an inevitable concomitant of the administration of 
any system by human beings. This risk must be weighed against 
the injustices and uncertainties resulting from the sovereign im- 
munity doctrine. (Of course, error is possible even under the 
sovereign immunity doctrine; lower courts in Dugan v. Rank, 
372 U.S. 609 (1963), interfered with the administration of the 
Central Valley water project for several years, until reversed by 



REC. 9. SOVEREIGN IMMUNITY 227 

the Supreme Court.) If the fear of improper judicial interference 
proves warranted, which seems unlikely, it could be met by a 
provision resti-icting temporary or interlocutory relief, pending 
a decision on the merits, in those situations in which caution is 
most warranted: when the action seeks (a) to compel the pay- 
ment of money by the United States, (b) to secure the possession 
or enjoyment of property in which the United States is admitted 
or found to have a legal or equitable interest, or (c) to require 
action to be taken on behalf of the United States which would 
involve the expenditure of public funds. 

Finally, the argument that abolition of sovereign immunity 
would allow judges to substitute their judgment for that of ad- 
ministrators overlooks the established limits on the scope of judi- 
cial review. Section 10(e) of the APA, now 5 U.S.C. §706, 
limits review to such questions as constitutionality, statutory 
authority, proper procedure, abuse of discretion, and findings 
supported by substantial evidence. The scope of review in a case 
formerly kept out of court by sovereign immunity will be the 
same as the scope of review in a case that has always been re- 
viewable. Substitution of judgment, de novo consideration, and 
the like, are not permitted. 

The Committee considered but rejected proposals that attempted 
to state considerations governing the grant of specific relief. 
The factors involved are so numerous and their application so 
dependent upon the circumstances of individual cases that the 
attempt to spell them out is an exceedingly difl^icult task. It 
is, moreover, a hazardous one, since any attempt to restate 
a complex body of law creates problems while attempting to 
solve them. Language suggesting that the law of judicial re- 
view is being changed in one direction or another is almost im- 
possible to avoid; and any partial restatement of relevant factors 
creates negative implications with respect to factors or doctrines 
that are omitted. Thus the Committee concluded that it was 
wiser to withdraw the defense of sovereign immunity in cer- 
tain situations in which its application is inappropriate, leaving 
all other law unrestated and unchanged. 

2. Inconvenience to the government from burdensome litiga- 
tion? Some government lawyers, defending the sovereign immu- 
nity doctrine, assert that it prevents a flood of litigation from 
overwhelming federal courts and government legal staffs. They 
point to the large number of "crackpot" suits which are filed 
against the United States and its agencies; and the value of 
sovereign immunity as a device for getting rid of these cases 



228 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

at the threshold, without the inconvenience and expense of a 
defense on the merits. "Crackpot" suits, however, have deficien- 
cies other than that they are directed against the United States 
or its oflficers. In nearly every such case there will be other 
grounds for dismissal on the pleadings (most often because 
the plaintiff lacks standing, because the issue is inappropriate 
for judicial determination, because the action is committed to 
agency discretion or precluded from review, or because the com- 
plaint fails to state a claim for relief). In nearly every case 
government lawyers assert a battery of defenses and objections, 
of which sovereign immunity is only one. If no other defense or 
objection exists, one suspects that the suit is not properly classi- 
fied as a "crank" suit and that consideration of the merits is 
desirable. 

The "floodgates" argument is always a difficult one to rebut 
in advance, but fears of this kind tend to be exaggerated. The 
doctrine of sovereign immunity is so riddled with exceptions that 
a large increase in the volume of litigation seems unlikely. The 
experience of those agencies that are now fully subject to judicial 
review under statutory review provisions suggests that the level 
of litigation is not crippling or burdensome, and that judicial 
review has many advantages, even from the agency's point of 
view. The heavy expense of litigation also serves as a pragmatic 
limit on the volume of cases. Other limiting doctrines, already 
discussed, will allow a threshhold disposition of unmeritorious 
cases. In the final analysis, if some additional cases do reach the 
merits because of the curtailment of sovereign immunity, the 
additional burden on government lawyers must be justified on 
the same basis as judicial review in general — the desirability 
of a judicial determination of the legality of official action. 

E. Retain Preseyit Exclusions on the Availability of Monetary 

or Alternative Relief 

The Committee's recommendation is phrased as not to eff'ect 
an implied repeal or amendment of any prohibition, limitation, 
or restriction of review contained in existing statutes, such as 
the Court of Claims Act, 28 U.S.C. § 1491, the Tucker Act, 28 
U.S.C. § 1346(a) (2), or the Federal Tort Claims Act, 28 U.S.C. 
§§ 1346(b), 1402(b), 1504, 2110, 2401, 2402, 2411, 2412, 2671- 
80, in which Congress has conditionally consented to suit. While 
this result would probably have been reached by the preservation 
of all other "legal or equitable grounds [s]" for dismissal, which 
include the designation by Congress of an exclusive remedy or 



REC. 9. SOVEREIGN IMMUNITY 229 

method of i-eview, clause (2) of the final sentence of part (1) 
of the recommendation is intended to prevent any question on 
this matter from arising. It states unequivocally that 

"Noting herein . . . (2) confers authority to grant relief if any other 
statute that grants consent to suit expressly or impliedly forbids the 
relief which is sought." 

As the earlier discussion has indicated, the purpose of the 
Committee's recommendation is to provide nonstatutory review 
in some situations in which the doctrine of sovereign immunity 
now stands in the way. The creation of new substantive damage 
claims is not within the sphere of our concern ; only a latitu- 
dinarian view of "judicial review" would consider monetary re- 
lief against the United States, primarily designed to compensate 
for harms done, as part of judicial review of administrative ac- 
tion, which is the subject of § 10 of the APA. However that may 
be, the language of our proposal, which is applicable in terms 
only to actions "seeking relief other than money damages," in- 
dicates that sovereign immunity remains as a defense to actions 
seeking monetary relief. Existing law governing money damages 
in tort and contract actions is left unchanged. Thus the exceptions 
from liability contained in the Federal Tort Claims Act, 28 U.S.C. 
§ 2680, such as the exclusion of most intentional torts and 
activities involving "a discretionary function," remain unaffected 
by the Committee's proposal. 

Similarly, in situations in which the statute consenting to 
monetary relief expressly or impliedly precludes an alternative 
remedy, such as the Court of Claims Act, 28 U.S.C. § 1491, and 
the Tucker Act, 28 U.S.C. § 1346(a) (2), suits for specific relief 
would continue to be barred, as those statutes by expressly con- 
senting to certain actions for money judgments impliedly pro- 
hibit actions seeking other relief. Special statutory remedies hav- 
ing the same character, such as those dealing with Indian claims, 
patent infringement, water rights, and the like retain the same 
preclusive effect on other remedies that they have now. Similarly, 
statutory provisions which prohibit injunctive or declaratory re- 
lief in certain situations continue to be effective where appli- 
cable {e.g., federal tax cases, 26 U.S.C. § 7421 and 28 U.S.C. 
§773b). 

On the other hand, the language of the recommendation should 
not be taken as withdrawing alternative remedies where they 
now exist. No new authority is conferred in situations dealt 
with by statutes granting consent to suit; but nothing is taken 
away. Presumably there are situations now in which specific 



230 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

relief can be obtained even though monetary relief for the claim 
involved is not authorized by a statute consenting to suit; an 
example might be a suit to enjoin a federal officer from engaging 
in an intentional tort, a situation in which the damage remedy 
against the United States is excluded by the Tort Claims Act, 
but without affecting the availability of specific relief. 

IV. Other Needed Reforms 

The present recommendation is devoted to sovereign im- 
munity in suits for specific relief in federal courts, but there are 
related reforms that are needed in order to realize the full bene- 
fits of withdrawing sovereign immunity as a defense in actions 
challenging federal administrative behavior and seeking relief 
other than money damages. 

A. Gaps in Tucker and Tort Claims Acts 

There are several situations in which neither monetary nor 
specific relief can now be obtained and the plaintiff has no 
judicial remedy at all, even though the matter is otherwise ap- 
propriate for judicial consideration. These cases come about mainly 
because of gaps in the Tucker and Tort Claims Acts, and also be- 
cause of the lack of full coordination between these two legisla- 
tive systems. Two situations in which monetary relief should 
probably be expanded are: (1) where monetary relief cannot 
be had in the Court of Claims or under the Tucker Act because 
the claim is quasi-contractual or restitutionary in character (con- 
tract implied in law rather than contract implied in fact) ; and 
(2) where tort damages cannot be recovered under the Federal 
Tort Claims Act because of the exceptions — especially that ex- 
cluding most intentional torts — contained in that enactment. The 
quasi-contract problem remains a real one in theory, although 
the Court of Claims has been adept at circumventing it by hold- 
ing in case after case that the particular contract is "implied in 
fact." There is no way around the tort-damage problem ex- 
cept by amendment of the Federal Tort Claims Act. Reconsidera- 
tion of the question of when the United States should be liable 
for the torts of its officers is long overdue; in the process it 
may be desirable to clarify inconsistent interpretations of other 
aspects of the Tort Claims Act. 

The relation of these matters to sovereign immunity is readily 
apparent. So long as there are unjustified gaps in the avail- 
ability of monetary compensation, there will be pressure to grant 
specific relief, even in instances where monetary relief is clearly 



REC. 9. SOVEREIGN IMMUNITY 231 

preferable. There will be, too, substantial risk to the develop- 
ment of an orderly and coherent body of law. For instance, there 
is no longer any justification at all for excluding contracts "im- 
plied in law" from the Tucker Act. There are tendencies, flowing 
from that exclusion, to push such claims under the Tort Claims 
Act or to expand the concept of contracts "implied in fact". There 
may also be injunction suits brought where the claimant would 
rather have the money, simply because no monetary relief is 
available. Other examples come from some of the exceptions to 
the Tort Claims Act which tend to put pressure on the concept 
of what is a "taking" redressable under the Tucker Act. For 
Congress to be in a position to make an intelligent choice among 
the possibilities of monetary compensation, specific relief, or both, 
these statutory exclusions from the Tucker and Tort Claims Acts 
should be reviewed for current soundness. 

B. Subject Matter Jurisdiction of Federal District Courts 

The Committee's recommendation does not vest subject mat- 
ter jurisdiction on federal district courts in any situation in 
which it does not now exist; it merely provides that certain 
actions shall not be dismissed, or relief denied, solely on sover- 
eign immunity grounds. This leaves the possibility that some 
actions for specific relief could not be brought either because 
the plaintiff's complaint does not arise under federal law or be- 
cause, even though a federal question is stated, the case must 
come within the general federal question provision of 28 U.S.C. 
§ 1331 and the amount in controversy does not exceed $10,000. 
An example of the former kind is Malone v. Bowdoin, 369 U.S. 
643 (1962), which was an ejectment action against a federal 
officer. In that case, which was originally brought in a state 
court, federal jurisdiction rested upon the removal statutes, but 
it is doubtful that the case could have been brought originally 
in a federal district court since the plaintiff's claim rested on 
state law. The quiet title statute, discussed below, would remedy 
this deficiency. The second problem, that of jurisdictional amount 
in certain federal-question cases, would be solved by the enact- 
ment of Recommendation 7 of the Administrative Conference, 
adopted December 12, 1968, providing for the elimination of the 
jurisdictional-amount requirement in judicial review actions. 

C. Quiet Title Statute 

Regardless of whether or not the sovereign immunity doctrine 
is abolished, a special statute authorizing suits to quiet title 



232 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

against the United States is desirable. Subject matter jurisdic- 
tion of federal district courts, as indicated earlier (see also p. 33, 
supra), will be doubtful in some cases without such an enact- 
ment. Moreover, some procedural aspects of land dispute litiga- 
tion involving the United States deserve special treatment {e.g., 
questions of interlocutory relief, jury trial, multiple parties, re- 
lation to eminent domain). The Committee on Judicial Review 
hopes to report on this matter at a later time. 

D. Service of Process and Venue Problems 

1. Service of process and parties defendant. Rule 4(d)(4) gov- 
erns service of process upon the United States. It provides that 
process must be served by delivery of a copy of the summons 
and complaint to the United States Attorney for the district in 
which the action is brought. In addition, a copy of the summons 
and complaint must be sent by registered or certified mail to 
the Attorney General of the United States in Washington, D.C. 
Failure to notify the Attorney General has been held to require 
dismissal (Smith v. McNainara, 895 F.2d 896 (10th Cir. 1968) ; 
Messenger v. United States, 231 F.2d 328 (2d Cir. 1956) ; Lem- 
mon V. Social Security Administration, 20 F.R.D. 215 (E.D. S.C. 
1957), although a few decisions prior to the 1966 amendment of 
Rule 15(c) permit the defect to be cured when dismissal would 
mean the barring of plaintiff's claim because of the running of 
the statute of limitation. Rollins v. United States, 286 F.2d 761, 
768 (9th Cir. 1961) ; Ftigle v. United States, 157 F.Supp. 81 
(D.Mont. 1957) ; the effect of the 1966 amendment to Rule 
15(c) is discussed, infra. Moreover, in an action attacking the 
validity of an order of an officer or agency of the United States, 
if the officer or agency has not been made a party to the action, 
a copy of the summons and complaint also must be sent by regis- 
tered or certified mail to the relevant federal officer or agency. 

Rule 4(d)(5), which supersedes prior inconsistent statutes, 
must be followed to effect service of process on an officer or 
agency of the United States, A copy of the summons and com- 
plaint must be delivered to the ofl^cer or agency being sued and 
service must be made on the United States itself as provided 
for in Rule 4(d) (4). If the federal agency involved is a corpora- 
tion, Rule 4(d) (5) requires that service also be made on the 
agent of the corporation as provided in Rule 4(d) (3), in addi- 
tion to service upon the United States under Rule 4(d)(4). 

Section 1391(e) of Title 28, added to the Judicial Code in 
1962, dispenses with the requirement of personal service in ac- 



REC. 9. SOVEREIGN IMMUNITY 233 

tions in which each defendant is an officer or employee of the 
United States or any agency thereof acting in his official capacity 
or under color of legal authority. In cases of this type, delivery 
of the summons and complaint may be by certified mail rather 
than personal delivery if the officer or agency to be served is 
beyond the territorial limits of the district in which the action 
is brought. Other aspects of Rule 4, however, continue to be ap- 
plicable. Thus in any such case service must be made upon the 
United States by notifying the Attorney General as provided 
in Rule 4(d) (4). 

The size and complexity of the federal government, coupled 
with the intricate and technical law concerning official capacity, 
parties defendant, and the like, have given rise to innumerable 
cases in which a plaintiff's claim has been dismissed because 
the wrong defendant was named or served. See the full discus- 
sion in Byse, Suing the "Wrong" Defendant in Judicial Review 
of Federal Administrative Action, 11 Harv. L. Rev. 40 (1963) ; 
Davis, Suing the Government By Falsely Pretending To Sue An 
Officer, 29 U. Chi. L. Rev. 435 (1962). The unsatisfactory state 
of the law has been recognized for some time and three attempts 
have now been made to cure the deficiencies : 

First, the Mandamus and Venue Act of 1962, 28 U.S.C §§ 1361, 
1391(e), circumvents the formerly troublesome requirement that 
superior officers be joined as parties defendant by allowing na- 
tionwide substituted service on the superior officer. Although the 
superior officer still must be joined when the law of parties 
considers him indispensable, the requirement can now be met 
by mailing a copy of the summons and complaint to the superior 
officer, thus allowing actions to proceed other than at the home 
base of the superior officer (usually the District of Columbia). 
The legislative history of the provision is to the effect that the 
law should not be tailored for the convenience of the govern- 
ment, but rather there should be "readily available, inexpensive 
judicial remedies for the citizen who is aggrieved by the workings 
of Government." The Congress noted that the law of parties 
defendant was not altogether clear either in logic or consistency 
and that such actions "are in essense against the United States." 
1962 U.S. Cong. & Adm. News 2784-2787. Hence Congress seems 
committed to providing a path through the procedural maze. 
Second, Rule 25(d) of the Federal Rules of Civil Procedure 
was amended in 1961 to provide for the automatic substitution 
of successors in office. This broad remedial provision is appli- 
cable to any action in which a "public officer" is sued in his 



234 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

"official capacity." The rule also states that "any misnomer not 
affecting the substantial rights of the parties shall be disregard- 
ed" and that the officer may be "described as a party by his official 
title rather than by name." 

Third, Rule 15(c) of the Federal Rules of Civil Procedure 
was amended in 1966 to make clear that an amendment adding 
or changing parties defendant in actions "with respect to the 
United States or any agency or officer thereof" relates back to 
the date of the original pleading whenever process was delivered 
or mailed "to the United States Attorney or his designee, or the 
Attorney General of the United States, or an agency or officer 
who would have been a proper defendant if named." This sen- 
tence allows a plaintiff who is in doubt concerning the identity 
of the proper officer or agency to commence his action by serving 
process on the United States Attorney, or the Attorney General, 
or an agency or officer who would have been a proper defendant 
if named. Difficulty of ascertaining the proper defendant is often 
understandable considering the vast array of government officers 
and agencies and technicalities that govern parties defendant. 
Under Rule 15(c) the plaintiff who has served any one of the 
persons designated may correct his pleading when the United 
States moves to dismiss on grounds that a particular officer was 
not named or joined as a defendant. Cases holding to the contrary 
either were decided prior to the 1966 amendment of Rule 15(c) 
or they are erroneous. In Smith v. McNamara, 395 F.2d 896 
(10th Cir. 1968), for example, dismissing an action because the 
proper officer was not served, the court's attention was not di- 
rected to the amendment to Rule 15(c). Dismissal is proper 
under the amended Rules only when the plaintiff fails to amend 
his pleading and to complete service on the proper officer within 
a reasonable time after the defect is raised. 

A liberal application of the three remedial provisions discussed 
above should prevent dismissals based on technicalities of the 
law of officers. The Congress and the draftsmen of the Federal 
Rules have indicated with great clarity that actions challenging 
federal conduct should be decided on the merits rather than on 
narrow procedural grounds. Although the law of parties defend- 
ant remains unchanged, the consequences of not selecting or 
serving the proper defendant at the outset, or failing to substi- 
tute a successor in office, have been ameliorated. The Department 
of Justice should take full note of these recent changes and in- 
form United States Attorneys of their import. 

If the amendments to Rules 15(c) and 25(d), coupled with 



REC. 9. SOVEREIGN IMMUNITY 235 

the extraterritorial service of process provision of 28 U.S.C. 
§ 1391(e), do not remedy the unsatisfactory case law relating to 
service of process and parties defendant in suits against federal 
officers, further reform will be required. One possibility, eliminat- 
ing all technical problems, would be to provide for service of 
process upon the United States Attorney of the district in which 
the action is brought, without more, thus imposing on the De- 
partment of Justice the burden of identifying the federal officer 
or agency that should be notified and the manner in which such 
notice is given. As long as the Government through its lawyers 
has adequate notice of the suit, dismissal because of technical de- 
fects about parties defendant is inappropriate. 

2. Venue. The venue part of the Mandamus and Venue Act of 
1962, 28 U.S.C. § 1391 (e), provides for venue of the type of action 
that the Committee's recommendation is concerned with. 28 U.S.C. 
§ 1391(e) allows actions against federal officers or agencies, act- 
ing in their official capacity or under color of legal authority, 
to be brought in the district in which "(1) a defendant in the 
action resides, or (2) the cause of action arose, or (3) any real 
property involved in the action is situated, or (4) the plaintiff 
resides if no real property is involved in the action." This pro- 
vision does not appear to be applicable to suits against the United 
States. Although there is a special venue provision dealing with 
actions in which the United States is a defendant, that provision, 
28 U.S.C. § 1402, applies only to three kinds of damage actions 
brought under 28 U.S.C. § 1346 (Tucker Act cases. Federal Tort 
Claims Act cases, and federal tax cases). And the general venue 
provision applicable to federal-question cases, 28 U.S.C. § 1391 
(b), is difficult to apply since it allows the action to be brought 
only in the district where "all defendants reside, or in which 
the claim arose." If the United States, like a corporation, resides 
where it is doing business, i.e., everywhere, the general venue 
provision of § 1391 (b) is too broad since suit could be brought 
on any claim in any judicial district chosen by the plaintiff; 
on the other hand, if, as seems more likely, a residence cannot 
be attributed to the United States, the action may be brought 
only where the cause of action arose, a much narrower venue 
choice than provided by 28 U.S.C. § 1391(e), which was drafted 
with the situation of the suit against the officer in mind. 

The Committee's recommendation, insofar as it permits the 
plaintiff to name the United States as defendant, is unlikely to 
be fully effective unless the venue provisions of 28 U.S.C. § 1391 
(e) are amended to include actions of the same type in which 



236 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

the United States is the named defendant. Until that happens, 
the suit against the officer, with the ample venue choice given 
by 28 U.S.C. § 1391(e), is likely to remain the manner in which 
actions are cast. 

If 28 U.S.C. § 1391 is amended to include actions in which the 
United States is named defendant, two other changes in the sec- 
tion would be desirable. Fi7-st, § 1391 (e) has been held inappli- 
cable to territories such as the Canal Zone (Leber v. Canal 
Zone Central Labor Union, 383 F.2d 110 (5th Cir. 1967)), an 
oversight that should be remedied. Second, § 1391 (e) prohibits 
the joinder of private persons or state officials as defendants 
since it is expressly limited to cases "in which each defendant 
is an officer or employee of the United States or an agency there- 
of." (Emphasis added.) Toivn of East Haven v. Eastern Airlines, 
282 F.Supp. 507 (D.Conn. 1968) ; Chase Savings & Loan Ass'n 
V. Federal Home Loan Bank Board, 269 F.Supp. 965 (E.D.Pa. 
1967). There is no functional justification for this limitation, 
which prevents relief in some situations in which the federal 
courts can make a special contribution. In many public land con- 
troversies, for example, three parties are involved — the official, 
a successful applicant, and an unsuccessful one. Effective relief 
cannot be obtained in an action in which the United States or 
its officer is not involved ; but if the government is named as 
defendant, § 1391 (e) prevents the joinder of the other private 
person (who cannot be joined as a plaintiff because his interest 
is adverse to that of the plaintiff) . Another common type of 
situation in which the limitation is troublesome is when specific 
relief is sought against federal and state officers who are coop- 
erating in a regulatory or enforcement program. 28 U.S.C. 
§ 1391(e) should be amended so as to allow for effective relief 
and binding judgments in multiple party situations. 

CONCLUSION 

Compared to other contemporary social problems — race, pov- 
erty, urban decay, and the like — sovereign immunity is relatively 
trivial and unimportant. Yet it is a subject on which the Ad- 
ministrative Conference of the United States may make a modest 
contribution in rationalizing a complex and intricate specialty 
of federal law. The Committee on Judicial Review, believing that 
the doctrine of sovereign immunity has outlived its usefulness, 
urges the Conference, by adopting the Committee's recommen- 
dation, to broaden the opportunities of citizens to obtain judicial 
review of federal administrative actions. 



RECOMMENDATION NO. 10 

JUDICIAL ENFORCEMENT OF ORDERS OF THE 
NATIONAL LABOR RELATIONS BOARD 

RECOMMENDATION 

The orders of most major independent i-egulatory agencies 
normally become enforceable automatically unless challenged in 
court. The statutory requirement that an order of the NLRB 
can be made effective only by affirmative action to obtain judicial 
confirmation of its terms, even when its validity is wholly un- 
contested, is contrary to efficient law enforcement. The Adminis- 
trative Conference of 1961-62 urged that NLRB orders be treated, 
for purposes of judicial review, like those of the other major 
independent administrative agencies. That recommendation re- 
mains as sound today as when it was first made. The present 
practice burdens the courts with unnecessary proceedings whose 
only product is delay rather than added protection against ill- 
founded action. In the absence of any challenge after due notice 
to the parties, NLRB orders should be enforceable by the U.S. 
Courts of Appeals without further intermediate steps. 



237 



REPORT OF THE COMMITTEE ON JUDICIAL REVIEW 
IN SUPPORT OF RECOMMENDATION NO. 10 



Unlike the orders of other Federal agencies included in the 
Committee's study, orders of the National Labor Relations 
Board are not self-enforcing. Rather, the Board must seek an 
order of enforcement from a Court of Appeals. This involves 
a period of waiting to see if a party to the case intends to seek 
judicial reviev^ of the order. It serves no useful purpose but op- 
crates to delay the effectiveness of NLRB orders and to impose 
unnecessary costs on the Board. 

Orders of other agencies, as detailed herein, are effective un- 
less set aside upon court review. No reason for continuation of 
this special treatment of NLRB orders has been discovered, 
and it is the conclusion of the Committee that these orders should 
be accorded the same finality given to the orders of other agencies. 

The problem was considered in detail by the 1961-62 Adminis- 
trative Conference, and that Conference recommended a pro- 
cedure which would result in automatic judicial enforcement of 
NLRB orders if no party promptly challenges the order. The 
procedure would have afforded a period of 45 days within which 
to challenge the order. If, after due notice to all parties, no 
such challenge were forthcoming, the order would be enforced 
without further proceedings by the entry of an appropriate court 
decree. (Recommendation No. 18 of the 1961-62 Conference.) 

This relatively non-controversial recommendation has not been 
implemented, apparently because it has been linked with other 
more controversial proposals to amend the National Labor Re- 
lations Act. The Committee believes that the recommendation is 
sound. The supporting reasons are set forth in the report which 
accompanied the 1962 recommendation, attached hereto as Ap- 
pendix II. Appendix I is a current review of the subject. 

Scope of Memorandum 

Professor Jaffe has noted that problems concerning the en- 
forcement of administrative regulations and orders 

"arise in large measure from the division of the enforcement function be- 
tween agencies and the courts. . . . [The most common sanctions for 

238 



REC. 10. REVIEW OF NLRB ORDERS 239 

disregard of administrative orders] cannot be imposed without at some 
point running the gauntlet of judicial scrutiny, however much the degree 
of scrutiny may vary in different situations. When the process is the ul- 
timate one of execution, it is customary for judicial action to precede ex- 
ecution." Jaffe, Judicial Control of Administrative Action (1965) at 261. 

He has also pointed out that there are 

"two stages in which the character of a remedy may be brought into ques- 
tion. Labor Board orders, for example, are idefinitely subject to court re- 
view and cannot be enforced unless and until a court, on motion of the 
Board, enters its own enforcing decree. Other orders become final, usually 
after sixty days, if the respondent has not sought review within that 
period." Id., at 266. 

Enforcement statutes for orders of the various administrative 
agencies and executive departments listed in the discussion sec- 
tion of this memorandum have been examined in an attempt to 
discover which agencies, in addition to the NLRB, issue orders 
which are not self-enforcing. Assuming absence of voluntary 
compliance with a given order, the NLRB must, in practice, 
take the initiative to subject its own orders to judicial review 
in order to insure their enforcement. Other agencies, e.g., the 
FTC, may rely upon an aggrieved party being required to in- 
stitute review proceedings on penalty of having the order in 
question become final without judicial review. 

No attempt has been made to go beyond the statutes them- 
selves into the rules of practice of any agency. Nor has any 
attempt been made to examine the legislative history of any of 
the various statutory provisions. The review statutes have been 
classified for descriptive purposes into four general categories. 

Conclusion 

Of all of the agencies examined, only the NLRB issues non- 
self-enforcing orders. Orders of the other agencies, if review- 
able, become final within a specified time unless a petition for 
review is filed by a party aggrieved by the agency's action. 

Discussion 

The review procedures may be grouped into four general cate- 
gories: 

1. NLRB Orders. 29 U.S.C. § 160(e) provides in part: 

"The Board shall have power to petition any court of appeals of the 
United States, or if all the courts of appeals to which application may be 
made are in vacation, any district court of the United States within any 
circuit or district, respectively, wherein the unfair labor practice in ques- 



240 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

tion occurred or wherein such person resides or transacts business, for 
the enforcement of such order and for appropriate temporary relief or 
restraining order, and shall file in the court the record in the proceed- 
ings, as provided in section 2112 of Title 28. . . Upon the filing of the rec- 
ord with it the jurisdiction of the court shall be exclusive and its judg- 
ment and decree shall be final, except that the same shall be subject to 
review by the appropriate United States court of appeals if application 
was made to the district court as hereinabove provided, and by the Su- 
preme Court of the United States upon writ of certiorari or certification 
as provided in section 1254 of Title 28." 

Section 160(f) provides: 

"Any person aggrieved by a final order of the Board granting or deny- 
ing in whole or in part the relief sought may obtain a review of such 
order in any United States court of appeals in the circuit wherein the 
unfair labor practice in question was alleged to have been engaged in or 
wherein such person resides or transacts business, or in the United 
States Court of Appeals for the District of Columbia, by filing in such 
court a written petition praying that the order of the board be modified 
or set aside. . . . Upon the filing of such petition, the court shall proceed 
in the same manner as in the case of an application by the Board under 
subsection (e) of this section, and shall have the same jurisdiction to 
grant to the Board such temporary relief or restraining order as it deems 
just and proper, and in like manner to make and enter a decree enforcing, 
modifying, or setting aside in whole or in part the order of the Board ; 
the findings of the Board with respect to questions of fact if supported 
by substantial evidence on the record considered as a whole shall in like 
manner be conclusive." 

The operation of the review procedure established by these pro- 
visions is fully discussed in Recommendation 18 of the 1962 
Administrative Conference. Here it is sufficient to say that these 
provisions differ in two important respects from the other stat- 
utory patterns for judicial review discussed below. First, sec- 
tion 160(f) provides for no time limit within which an aggrieved 
party must file a petition for review before the order in question 
becomes enforceable. Second, the agency itself is given the power 
to initiate action before the reviewing court. The effect of these 
provisions is clearly to deprive all NLRB orders of enforce- 
ability until passed upon by a court of appeals. 

2. Other Orders Revieived by Courts of Appeals. A second 
review procedure (and the most frequently encountered among 
those examined) is illustrated by the Federal Trade Commission 
statute. 15 U.S.C § 45(c) provides: 

"Any person, partnership, or corporation required by an order of the 
Commission to cease and desist from using any method of competition or 
act or practice may obtain review of such order in the court of appeals 
of the United States, within any circuit where the method of competition 
or the act or practice in question was used or where such person, part- 



REC. 10. REVIEW OF NLRB ORDERS 241 

nership, or corporation resides or carries on business, by filing: in the 
court, within sixty days from the date of the service of such order, a 
written petition prayinjj that the order of the Commission be set 
aside. . . Upon such filing: of the petition the court shall have jurisdic- 
tion of the proceedinu:, and of the question determined therein concur- 
rently with the Commission until the filiner of the record and shall have 
the power to make and enter a decree affirming, modifying:, or setting 
aside the order of the Commission, and enforcing the same to the extent 
that such order is affirmed and to issue such writs as are ancillary to its 
jurisdiction or are necessary in its judgment to prevent iniury to the 
public or to competitors pendente lite . . . The judgment and decree of 
the court shall be final, except that the same shall be subject to review 
by the Supreme Court upon certiorari, as provided in section 347 of Title 
28." 

15 U.S.C. § 21(c) is another review provision essentially similar 
to section 45(c) and governs Robinson-Patman Act cases. Sec- 
tion 45(g) specifically provides that FTC orders become final 
upon the expiration of certain periods of time following the 
entry of the order, action by a court of appeals, or filing of a 
petition for certiorari, or immediately upon denial of a petition 
for certiorari. 

Other agencies whose orders are reviewed under essentially 
similar provisions, becoming final after sixty days unless a peti- 
tion for review is filed are, with the appropriate citation : 

(1) Atomic Energy Commission (28 U.S.C. § 2342; 42 U.S.C. § 
2239(b)). 

(2) National Transportation Board (49 U.S.C. § 1468 (a)). A special 
provision, 49 U.S.C. § 1485(e), expressly imposes a duty to observe and 
comply with orders while they are in effect on the parties at whom they 
are directed. In most other cases this duty is implicit but is not expressly 
set out. 

(3) Federal Communications Commission (47 U.S.C. § 402(a); 28 
U.S.C. § 2341 et seq.). 

(4) Federal Power Commission (15 U.S.C. § 717r(b) ; 15 U.S.C. § 
8251). 

(5) Securities and Exchange Commission (15 U.S.C. § 77i(a). 

(6) Subversive Activities Control Board (50 U.S.C. § 793). 

(7) Department of Agriculture (certain orders) (7 U.S.C. § 346a(i); 
28 U.S.C. § 2341 et seq.). 

(8) Department of Health, Education, and Welfare (certain orders) 
(21 U.S.C. §§ 348(g), 355(h); 15 U.S.C. § 1262(a)(2)(B)). 

(9) Department of Justice (certain orders) (22 U.S.C. § 1631g(f)). 

In other cases the petition must be filed in a court of appeals 
within thirty days, 

(1) Federal Coal Mine Safety Board of Review orders under 3 U.S.C. 
§ 478(a) and, 

(2) Department of Agriculture orders under 7 U.S.C. § 194(a), 



242 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

or in a court of appeals within ninety days, 

(1) Department of Defense orders under 33 U.S.C. § 505 and, 

(2) Department of Health, Education and Welfare orders under 21 
U.S.C. § 371(f). 

3. Orders Reviewed By Other Courts According to Special 
Statutory Provisions in Each Case. The following agencies issue 
certain orders which are reviewed according to particular pro- 
cedures set out in the Code section cited. In no case, however, 
IS an agency required to seek judicial review of its own orderi 
as in NLRB cases: 

(1) Interstate Commerce Commission (in the district courts) 28 
U.S.C. §1336 (a); 

(2) Civil Service Commission (in the district courts within thirty 
days), 5 U.S.C. § 118k (c) ; 

(3) Treasury Department orders, issued prior to Reorganization Plan 
No. 1 of 1965 by the Tariff Commission (in the Court of Customs and 
Patent Appeals), 19 U.S.C. § 1515; 

(4) Certain orders of the Department of Agriculture (in the district 

^To L' l^-^-^- ^ ^^^^ ^^^ ^^^'^' ^ U.S.C. § 608(c) (15) (B) (20 days), 
7 U.S.C. §499g(c) (30 days), and 7 U.S.C. § 210(f) (one year); 

(5) Department of Labor orders under 33 U.S.C. § 921 (in the dis- 
trict courts within 30 days) ; and 

(6) Post Office Department orders under 39 U.S.C. §6212 (in the 
District of Columbia Court of Appeals only and within 20 days) . 

4. Orders Revieived Under the Administrative Procedure Act. 

The orders of some agencies are reviewable only in nonstatu- 
tory review proceedings in accordance with the Administrative 
Procedure Act, 5 U.S.C. § 703: 

"In the absence or inadequacy [of a statutory review proceeding], the 
torm of proceeding for judicial review shall be . . . any applicable form of 
legal action (including actions for declaratory judgments or writs of 
prohibitory or mandatory injunction or habeas corpus) in any court of 
competent jurisdiction. ..." 

Orders reviewable only by injunction or declaratory judg- 
ment under these general provisions include orders not men- 
tioned above of the following agencies : 

(1) Federal Home Loan Bank Board, 

(2) Department of Agriculture, 

(3) Department of Commerce, 

(4) Department of the Interior, 

(5) Department of Justice, 

(6) Department of Labor, 

(7) Department of State and, 

(8) Department of the Treasury. 



REC. 10. REVIEW OF NLRB ORDERS 243 

In these situations, however, the administrative order is final 
and effective unless and until it is set aside by the court pro- 
ceeding challenging its validity. 

Summary 

In categorizing the various types of judicial enforcement pro- 
visions and classifying agencies in these categories, no attempt 
has been made to be exhaustive beyond the list of administra- 
tive proceedings set out in the document Special Statutory 
Provisions Governing Judicial Review of Federal Administra- 
tive Proceedings, Parts I & II, Committee on Judicial Review, 
Administrative Conference of the United States, August, 1962. 
Citations found therein were updated through 1967 by reference 
to Supplement III to the United States Code, 1964. Provisions 
of the Code relating to the Departments of Transportation and 
Housing and Urban Development were also examined. The focus 
of the inquiry was to discover whether among the various types 
of administrative orders described in the above mentioned docu- 
ment there were any which ymist be enforced in a manner simi- 
lar to NLRB orders. The NLRB situation was found to be unique. 



APPENDIX I 
1962 RECOMMENDATION 18 WITH SUPPORTING REPORT 

RECOMMENDATION NO. 18 

It Is Recomynended That — 

The National Labor Relations Act be amended to provide in substance that 
a petition for review of a Board decision and order may be filed within 30 
days in the appropriate court of appeals by the party seeking review; that if 
no such petition is filed, the board shall forthwith file a copy of the Board 
decision and order in an appropriate circuit court of appeals of the United 
States and that notice of such filing shall be served upon each respondent; 
that 15 days .shall then be given to each respondent after notice to file objec- 
tions to the order; and that if no such review is requested within that time, 
the clerk of the court shall then enter forthwith a decree enforcing the order 
of the Board. 



244 administrative conference of the united states 

Report of the Committee on Judicial Review of the Admin- 
istrative Conference of the United States in Support of 
Recommendation on Enforcement of NLRB Orders 

I. The Problem 

Under the present statutes, orders of the National Labor Re- 
lations Board lack binding effect until entry of a decree of en- 
forcement by a Court of Appeals. It has been contended that this 
requirement contributes to the delays which constitute a serious 
impediment to the vitality of the national labor relations laws. 
The question is whether there is a need to remedy the situation 
and, if so, what measures would be appropriate. 

II. Present Procedures for Enforcement of NLRB Orders 

A. The Statute 

Section 10(c) of the National Labor Relations Act, as 
amended, provides that if the Board finds that a person has 
engaged in an unfair labor practice, "then the Board shall state 
its findings of fact and shall issue and cause to be served on such 
person an order requiring such person to cease and desist from 
such unfair labor practice, and to take such affirmative action 
including reinstatement of employees with or without back pay, 
as will effectuate the policies of this Act." 

Section 10(e) provides that "The Board shall have power to 
petition any court of appeals of the United States, or if all the 
courts of appeals to which application may be made are in vaca- 
tion, any district court of the United States, within any circuit 
or district, respectively, wherein the unfair labor practice in 
question occurred or wherein such person resides or transacts 
business, for the enforcement of such order and for appropriate 
temporary relief or restraining order, and shall file in the court 
the record in the proceedings, as provided in section 2112 of title 
28, United States Code. Upon the filing of such petition, the 
court shall cause notice thereof to be served upon such person, 
and thereupon shall have jurisdiction of the proceeding and of 
the question determined therein, and shall have power to grant 
such temporary relief or restraining order as it deems just and 
proper, and to make and enter a decree enforcing, modifying, 
and enforcing as so modified, or setting aside in whole or in 
part the order of the Board." 

Under Section 10(f), any person aggrieved by a final order 



REC. in. REVIEW OF NLRB ORDERS 245 

of the Board may obtain a review of such order in a court of 
appeals under similar proceedings. 

Section 10(g) provides that the commencement of proceedings 
under section 10(e) or (f) shall not, unless specifically ordered 
by the court, operate as a stay of the Board's order. Section 10 
(i) states that "petitions filed under this Act shall be heard 
expeditiously, and if possible within ten days after they have 
been docketed." 

B. The NLRB's Statements of Procedure 

Pursuant to section 3(a) (2) of the Administrative Procedure 
Act, the NLRB has published in the Code of Federal Regula- 
tions a series of Statements of Procedure. The portions dealing 
with enforcement of Board orders are as follows: 

1. Comi^Uance with Board Decision and Order 

Section 101.13. (a) Shortly after the Board's decision and order is is- 
sued the director of the regional office in which the charge was filed com- 
municates with the respondent for the purpose of obtaining compliance. 
Conferences may be held to arrange the details necessary for compliance 
with the terms of the order. 

(b) If the respondent effects full compliance with the terms of the 
order, the regional director submits a report to that effect to Washing- 
ton, D.C., after which the case may be closed. Despite compliance, how- 
ever, the Board's order is a continuing one; therefore, the closing of a 
case on compliance is necessarily conditioned upon the continued observ- 
ance of that order; and in some cases it is deemed desirable, notwith- 
standing compliance, to implement the order with an enforcing decree. 
Subsequent violations of the order may become the basis of further pro- 
ceedings. 

2. Judicial Revieivs of Board Decision and Order 

Section 101.14. If the respondent does not comply with the Board's 
order, or the Board deems it desirable to implement the order with a court 
decree, the Board may petition the appropriate Federal court for enforce- 
ment. Or, the respondent may petition the circuit court of appeals to re- 
view and set aside the Board's order. Upon such review or enforcement 
proceedings, the court reviews the record and the Board's findings and 
order and sustain them if they are in accordance with the requirements 
of the law. The court may enforce, modify, or set aside in whole or in 
part the Board's findings and order, or it may remand the case to the 
Board for further proceedings as directed by the court. Following the 
court's decree, either the Government or the private party may petition 
the Supreme Court for review upon writ of certiorari. Such applications 
for review to the Supreme Court are handled by the Board through the 
Solicitor General of the United States. 



246 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

3. Compliance With Court Decree 

Section 101.15. After a Board order has been enforced by a court de- 
cree, the Board has the responsibility of obtaining compliance with that 
decree. Investig-ation is made by the regional office of the respondent's 
efforts to comply. If it finds that the respondent has failed to live up to 
the terms of the court's decree, the general counsel may, on behalf of the 
Board, petition the court to hold him in contempt of court. The court 
may order immediate remedial action and impose sanctions and penalties. 

4. Back-Pay Proceedings 

Section 101.16. After a Board order directing the payment of back pay 
has been enforced by a court order, the regional office computes the 
amount of back pay due each employee. If informal efforts to dispose of 
the matter prove unsuccessful, the regional director is then authorized to 
issue a "backpay specification" in the name of the Board and a notice of 
hearing before a trial examiner, both of which are served on the parties 
involved. The specification sets forth the computations showing how the 
regional director arrived at the net back pay due each employee. The 
respondent must file an answer within 15 days of the receint of the 
specification, setting forth a particularized statement of its defense. The 
procedure before the trial examiner of the Board is substantially the same 
as in [original unfair labor practice case]. 

C. Internal NLRB Procedures in Enforcing Board Orders 

Upon the issuance of a Board order in an unfair labor practice pro- 
ceeding directing the respondent employer or union to cease and desist 
from committing the unfair labor practices which the Board has found 
and directing the taking of such affirmative action as the Board finds 
will effectuate the policies of the Act, the Regional Office in which the 
case arose attempts to secure the voluntary compliance with this order. 
If such compliance is not acheived the Regional Office refers the case to 
Washington for the institution of enforcement proceedings in the appro- 
priate Court of Appeals. The Appellate Court Branch seeks full enforce- 
ment of all Board orders referred by the Regional Offices, unless the 
Board itself directs otherwise. Court proceedings may also be instituted 
by the employer or union against whom the order runs, or by any person 
who is aggrieved by the Board's failure to grant the relief to which such 
person believes himself to have been entitled. 

When the case is received by the Appellate Court Branch (whether for 
enforcement or on petition for review) the case is assigned to a briefing 
attorney and to a briefing supervisor. Such assignments are normally 
made in the order in which cases are referred for enforcement and, de- 
pending upon the volume of work in the office at a particular time, will 
be made from 1 day to 2 weeks after the case is received. The briefing 
attorney reads the record, the briefs and exceptions filed by the parties, 
the intermediate report, and the Board's decision, and then discusses the 
issues in the case with his supervisor. This discussion, which normally 
takes place within a week after the case is assigned, will determine 
whether court proceedings will follow immediately or whether the case 
will be referred back to the Board for reexamination or correction in the 



REC. 10. REVIEW OF NLRB ORDERS 247 

light of problems or possible errors which the briefing attorney and his 
supervisor may have discovered. Only a very small percentage of the 
cases are referred back to the Board. The balance are prepared immedi- 
ately for court review. Normally a petition is filed in the court anywhere 
from 3 weeks to 2 months after referral of the case for enforcement, de- 
pending upon the complexities of the case. Special circumstances, for ex- 
ample settlement negotiations, may delay the filing of a petition further 
in some cases. 

The briefing attorney prepares a draft of the proposed brief to be filed 
in the Court of Appeals in support of the Board's order. The briefing 
attorney also prepares a designation of the parts of the record which are 
to be printed for the court's use in reviewing the Board's order. The 
briefing supervisor reviews the brief and, using his best judgment, may 
to the extent that it may be necessary either revise the draft or return it 
to the briefing attorney with suggestions. The brief is then reviewed by 
the Assistant General Counsel, who may have further changes to sug- 
gest. Shortly before the date on which the brief is due in court (the due 
dates are fixed by court rule varying from circuit to circuit and ordinar- 
ily depend upon the date the proceeding was instituted), the brief will be 
sent to the Government Printing Office and will be reviewed in page 
proof by the Associated General Counsel and occasionally by the General 
Counsel where the case may present issues of special interest to him. In 
many cases a further brief, a "reply brief", is filed following the receipt 
of the opponent's brief — such a brief is prepared and reviewed in the 
same manner. 

After all the briefs are on file, the Court of Appeals sets the case for 
oral argument, which is ordinarily presented on behalf of the Board by 
the brief writer or the supervisor assigned to the case. If the court's de- 
cision is adverse or contains language which appears contrary to the best 
interests of the Board, the brief writer and supervisor may recommend 
the filing of a petition for rehearing. If filing such a petition is approved 
by the Assistant and Associate General Counsels, it will be prepared and 
reviewed in the same manner as the brief. . . . 

Over the past 10 years a little more than 50 percent of the Board's 
decisions and orders in unfair labor practice cases have been taken to 
court on either a petition for enforcement or a petition for review. The 
figure for Fiscal 1960 was 52 percent. The highest recent figure was 73 
percent in 1952 — -a figure which stands alone as inexplicably high; the 
lowest was 47 percent in 1955. Omitting 1952, the 10-year figures vary 
between 47 percent and 57 percent. 

The caseload of referrals for enforcement or review in recent years 
has been as follows: 

Fiscal year : ^<»- "f «"«• 

1961 (to April 21) 173 

1960 197 

1959 155 

1958 110 

1957 .. 76 

The Appellate Branch also handles contempt proceedings in cases in- 
volving disobedience of a decree enforcing a Board unfair labor practice 



248 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

order, Section 10(e) interim injunctive relief pending enforcement or re- 
view proceedings in the Courts of Appeals, and enforcement of Board 
backpay orders issued following the entry of a decree requiring a respond- 
ent to make whole employees who have been the victims of discrimina- 
tion. Unlike proceedings for enforcement of a Board order, which are 
initiated following referral from a Regional Office without further 
authorization from the Board, contempt proceedings and proceedings 
looking toward a 10(e) injunction are cleared with the Board and specifi- 
cally authorized in each case. Upon the receipt of a recommendation from 
a Regional Officer for the institution of contempt or 10(e) proceedings, 
the case is assigned to a brief writer and supervisor, just as in a regular 
enforcement case. They analyze the case and, if they concur with the Re- 
gion's recommendation, they prepare a memorandum to the Board for 
the signature of the General Counsel recommending the institution of ap- 
propriate proceedings. If they disagree with the Region's recommenda- 
tion, they prepare a memorandum for the Assistant General Counsel re- 
turning the case to the Region. In either event, the memorandum is then 
reviewed by the Assistant General Counsel and the Associate General 
Counsel before being forwarded either to the General Counsel for his ap- 
proval or transmission to the Board, or back to the Regional Office, as 
the case may be. Where the question appears sufficiently close, a recom- 
mendation adverse to that of the Region may also be submitted to the 
General Counsel, and by him to the Board. 

If the Board approves the institution of contempt or 10(e) proceed- 
ings, the papers initiating the court proceeding are prepared by the 
briefer and his supervisor and are reviewed in the same manner as an 
enforcement brief. Contempt proceedings may involve a protracted hear- 
ing before a court-appointed master and all the investigation and prepa- 
ration for trial which precedes an ordinary unfair labor practice case. 
This work will normally be handled by the briefing attorney, often with 
the active cooperation of the Regional Office. Section 10(e) proceedings 
normally involve a short oral argument before the Court of Appeals, 
which will ordinarily be handled by the briefer or supervisor or Assist- 
ant General Counsel. Subsequent steps to a contempt proceeding such as 
briefs to the Master, exceptions to his report and oral argument in the 
Court of Appeals will be handled in the same manner as briefs and oral 
argument in an enforcement proceeding. Because of the importance and 
exacting demands of contempt and 10(e) litigation, such cases will nor- 
mally be assigned to brief writers of outstanding capacity or long 
experience. 

Backpay proceedings are referred in precisely the same manner as 
other proceedings for enforcement of Board orders, and are handled in 
the same manner as other enforcement proceedings except that instead 
of a routine petition for enforcement, we file a motion with the court 
asking that it direct the party objecting to the backpay award to indi- 
cate its grounds for stating that the court's decree should not be 
amended to include the specific amounts of backpay the Board has found 
due. This procedure effectively narrows the issues before the court so 
that our brief can be directed only to the specific points at issue rather 
than encompassing all conceivable issues in the case. 
(Statement of Dominick L. Manoli, Associate General Counsel of the 



REC. 10. REVIEW OF NLRB ORDERS 249 

NLRB before a Subcommittee on the House Committee on Education and 
Labor, May 8, 1961.) 

D. Background of the Provision Requiring Court of Appeals 
Enforcement Order 

At the time when the National Labor Relations Act was passed 
in 1935, the enforcement provisions represented a great advance 
over the situation which had prevailed under earlier Labor 
Boards during the NRA period. Milton Handler, who was General 
Counsel of the National Labor Board in the NRA period, testi- 
fied that "under the present statute, interminable delays have 
resulted from the fact that numerous administrative hearings 
have been held by agencies without power to enforce their 
decisions. . . . Hence the need of an administrative agency with 
the power to issue orders enforcible in the courts." To the critics 
who asserted that unprecedented powers were to be vested in 
the new Board, Mr. Handler replied that "it must not be for- 
gotten that the orders of the board are not self -executing ; they 
can only be enforced in the courts. . ." (Legislative History of 
theNLRA, p. 66). 

Francis Biddle, who was chairman of the old National Labor 
Relations Board, described the unsatisfactory enforcement 
situation: 

Between July 9, 1934, the date of its creation, and March 2, 1935, the 
National Labor Relations Board issued findings and decisions in 111 
cases. In 86 of these the Board found that violations had occurred. In 
only 34 of these did the employer make appropriate restitution in accord- 
ance with our decision. In the remaining 52 of the 86 cases such compli- 
ance was not obtained. In these 52 cases, therefore, it was necessary for 
the Board to attempt to obtain enforcement through the removal of the 
'blue eagle' or through court action. Of these 52 cases the Board re- 
ferred 33 to the Department of Justice. 

The status of these 33 cases is as follows: In one case a bill in equity 
has been filed in the district court. Seven cases have been referred to the 
local United States Attorney, on the understanding that further evidence 
must be secured by him in cooperation with the Board before instituting 
suit. In none of these cases has suit been brought. In nine cases the De- 
partment of Justice has advised the Board that further investigation on 
certain points is necessary before the case can be referred to the local 
United States Attorney, and in three cases the Department has advised 
that as a matter of law no suit is justified. In 13 cases the Department 
has not proceeded for various reasons . . . 

What I am getting at is not in any sense a criticism of the Department 
of Justice, but to show that the system under which we are working and 
the machinery under which we are trying to enforce the law makes inevi- 
table the break-down of legal enforcement, and the necessity for such 



250 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

machinery as the Wagner bill includes. (Legislative History of the 
NLRA, p. 1469). 

Mr. Biddle was of the opinion that "the solution ... is that 
adequate powers be given to a single experienced agency to find 
out the facts and carry through enforcement of the law up to 
the point of review in the circuit court of appeals." 

Senator La Follette commented: "Even that will be slow 
enough," 

Mr. Biddle replied that Senator Wagner had eliminated one 
step by providing they should go directly into the court of appeals 
rather than the district court. He noted that "it is not in any 
sense a novel procedure but on the contrary is one which has 
been adequately tested by the experience of other administrative 
tribunals, notable the Interstate Commerce Commission and the 
Federal Trade Commission." (Legislative History of the NLRA, 
pp. 1471-1473). 

In summary, at the time of enactment of the court enforce- 
ment provision of the Wagner Act, it was regarded as a distinct 
improvement over the pre-existing situation; it was in line with 
the Federal Trade Commission procedure in existence at that 
time; and the delays in obtaining an effective order which have 
recently been observed were not then foreseen. 

In 1940, the Monograph of the Attorney General's Committee 
on Administrative Procedure dealing with the National Labor 
Relations Board noted (p. 2) : 

The Board's orders are not self -executing; no penalty attaches to a viola- 
tion thereof; and the Government must resort by petition to the appropri- 
ate circuit court of appeals for enforcement of the ordei". . . . Since em- 
ployers have nothing to lose by violating the provisions of the Act, ex- 
cept to receive an admonition to discontinue their activities, amendments 
to provide for more effective sanctions have frequently been advocated. 
Proponents for change have suggested that . . . Board orders be made 
effective upon issuance . . . none of these suggestions has eventuated in 
congressional action. 

In its Final Report in 1941, the Attorney General's Committee 
on Administrative Procedure noted (pp. 82-83) : 

Statutes creating administrative tribunals generally provide methods by 
which their determinations may be judicially reviewed. In this way, a 
number of methods have been established: First is the case in which the 
administrative order is not self-operative and suit for enforcement must 
be brought by the agency. For example, prior to 1906, no sanction was 
provided for securing obedience to orders of the I.C.C. other than a suit 
by the Commission to compel obedience. The same was true of the Fed- 
eral Trade Commission Act until 1938, and it is true today of the Na- 
tional Labor Relations Act. . . . 



REC. 10. REVIEW OF NLRB ORDERS 251 

A method of review which has found considerable favor in recent legis- 
iation is that first enacted in the Federal Trade Commission Act of 1914, 
that is, review in a Circuit Court of Appeals with discretionary appellate 
jurisdiction in the Supreme Court. This method has been enacted both for 
cases in which the admininstrative order is self-operative as those under 
the Federal Trade Commission Act since 1938, and cases in which the 
order carries no sanction until it is approved by the court, such as in the 
case of orders of the National Labor Relations Board now. 

However, the Attorney General's Committee did not make any 
recommendations to change the situation under which the orders 
of the NLRB lack a sanction until the Board obtains an en- 
forcement order from the Court of Appeals. 

The National Labor Relations Act was substantially amended 
in 1947 (Taft-Hartley Act) and in 1959 (Landrum-Griffin 
Amendments), but the Legislative Histories do not indicate any 
proposals or debates dealing with delay in enforcement due to the 
necessity for the Board to obtain a Court of Appeals order 
before the Board's order would carry any sanctions. 

III. Criticisms and Proposed Remedies 
The "Cox Panel" Recommendation 

(Report to the Senate Committee on Labor and Public Wel- 
fare on Organization and Procedure of the NLRB, prepared by 
the Advisory Panel on Labor-Management Relations Law, 86th 
Congress, 2d Session, Senate Document No. 81.) 

After noting that "no change ... is more important than 
speeding up the processes of decisions in unfair labor practice 
cases" and that [rights are] "hardly vindicated by a cease-and- 
desist order which does not become effective through court en- 
forcement until two years later" (p. 10), the Panel made the 
following analysis and recommendation (pp. 16-17) : 

Enforcemetit and review of Board orders. — Under the present statute 
an NLRB order carries no legal sanctions. The respondent may ignore it. 
The Board may file a petition for enforcement and 378 days later, on the 
average, a judicial decree may be entered enforcing the order of the 
Board.-" Violation of this decree would be punishable as contempt. The 
long delay between the NLRB decision and an effective judicial decree is 
another unsatisfactory aspect of the present unfair labor practice 
procedure. 

One cause of the delay is the slowness of all appellate litigation. It 
takes time to print records and briefs. In some circuits the dockets are 
heavy. Some circuit courts do not sit in the summer months. The average 
time is built up by the 4 months mimimum delay attendant upon peti- 



-" Memorandum from Hon. Boyd Leedom to a member of the staff of Senate Committee on 
Labor and Public Welfare, Feb. 11, 1959. 



252 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

tions to the Supreme Court for writs of certiorari and the year or longer 
which the Supreme Court takes to hear cases on the merits. Manifestly 
this aspect of the problem is not peculiar to labor-management cases and 
cannot be solved by changes in the National Labor Relations Act. 

A controllable factor is the time spent in negotiating about compliance 
with the Board's order. Once an order is passed there is no occasion for 
reviews by attorneys on the staff of the General Counsel or the proposed 
Administrator. If immediate compliance is not forthcoming, a judicial 
decree should be obtained. 

The necessity of the Government's seeking judicial relief in order to 
put sanctions behind NLRB orders encourages procrastination by both 
private parties and the NLRB staff. No one questions the importance of 
allowing a full opportunity for judicial review but after the Board is- 
sued an order in a contested case it is not unfair to put upon the respon- 
dent the burden of complying or promptly seeking judicial relief. 

The Federal Trade Commission Act provides that orders issued by the 
Federal Trade Commission under section 5 shall become final unless a 
petition for review is filed within 60 days. Violations of an order which 
has become final are punishable by a penalty of $5,000 for each day the 
violation continues. The monetary penalty seems inappropriate but it 
would expedite the entire process of enforcement and judicial review to 
adapt the rest of the Federal Trade Commission procedure to NLRB 
cases. An NLRB order should become final if the respondent does not file 
a petition for review within 30 days. Once the order becomes final the 
Administrator should be required forthwith to file a copy in an appro- 
priate circuit court of appeals, with notice to the respondent. If the re- 
spondent does not file a petition for review within an additional 15 days, 
the order of the NLRB should, unless the court otherwise directs, be en- 
tered by the clerk as the decree of the court. Violations would be punish- 
able by contempt. We also believe that any party to NLRB proceedings 
should be allowed to intervene in the appellate proceedings. This would 
clarify an uncertain issue. 

These changes would accelerate postdecision litigation without impair- 
ing the procedural or substantive rights of any party. The panel unani- 
mously recommends their incorporation into the NLRA. The necessary 
statutory changes will be found in sections 10(e) and (f) of the attached 
bill. 

Respectfully submitted. 

David L. Cole, 
Guy Farmer, 
Arthur Goldberg, 
Charles Gregory, 
Denison Kitchel, 
Plato E. Papps, 
Gerard Reilly, 
Louis Sherman, 
Russell A. Smith, 
George W. Taylor, 
W. Willard Wirtz, 
Archibald Cox, Chairman. 

January 15, 1960. 



REC. 10. REVIEW OF NLRB ORDERS 253 

Sections 10 (e) and (f) of the "Cox Panel" bill are as follows: 

"(e) Any person (except the Administrator) aggrieved by a final 
order of the Board granting or denying in whole or in part the relief 
sought may obtain a review of such order in any court of appeals of the 
United States in the circuit wherein the unfair labor practice in question 
was alleged to have been engaged in or wherein such person resides or 
transacts business, or in the Court of Appeals for the District of Colum- 
bia Circuit, by filing in such court within thirty days after the service of 
such order a written petition praying that the order of the Board be mod- 
ified or set aside. A copy of such petition shall be forthwith served upon 
the Board and the Admininstrator and thereupon the Board shall file in 
the court a transcript of the entire record in the manner and form pro- 
vided under section 2112 of the Judicial Code. Upon such filing the court 
shall have jurisdiction of the proceeding and of the question determined 
therein, and shall have power to grant to the petitioner or any other 
party including the Board such temporary relief or restraining order as 
it deems just and proper, and to make and enter upon the pleadings, testi- 
mony, and proceedings set forth in such transcript a decree enforcing, 
modifying, and enforcing as so modified, or setting aside in whole or in 
part, the order of the Board. Any party to the proceeding before the 
Board shall be permitted to intervene in the court of appeals. No objec- 
tion, that has not been urged before the Board on exceptions shall be con- 
sidered by the court, unless the failure or neglect to urge such objection 
shall b? excused because of extraordinary circumstances. The findings of 
the Board with respect to questions of fact if supported by substantial ev- 
idence on the record considered as a whole shall be conclusive. If either 
party shall apply to the court for leave to adduce additional evidence and 
shall show to the satisfaction of the court that such additional evidence 
is material and that there were reasonable grounds for the failure to ad- 
duce such evidence in the hearing before the Board, its member, agent, 
or agency, the court may order such additional evidence to be taken be- 
fore the Board, its members, agent, or agency, and to be made a part of 
the transcript. The Board may modify its findings as to the facts, or 
make new findings, by reason of additional evidence so taken and filed, 
and it shall file such modified or new findings, which findings with re- 
spect to questions of fact if supported by substantial evidence on the rec- 
ord considered as a whole, shall be conclusive, and shall file its recom- 
mendations, if any, for the modification or setting aside of its original 
order. The jurisdiction of the court shall be exclusive and its judgment 
and decree shall be final, except that the same shall be subject to review 
by the appropriate circuit court of appeals if application was made to 
the district court as hereinabove provided, and by the Supreme Court of 
the United States upon writ of certiorari or certification as provided in 
sections 239 and 240 of the Judicial Code, as amended (U.S.C, title 28, 
sees. 346 and 347). Attorneys appointed by the Administrator shall ap- 
pear on behalf of the Board in any proceeding under this subsection. 

"(f) If no petition for review is filed within thirty days, the Adminis- 
trator shall forthwith file a copy of the order of the Board in a circuit 
court of appeals of the United States (including the Court of Appeals 
for the District of Columbia) within any circuit wherein the unfair labor 



254 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

practice in question was alleged to have been engaged in or where a re- 
spondent named in the order resides or transacts business and the court 
shall cause notice of the filing to be served upon each respondent. Within 
fifteen days of such service any respondent may file objections to the 
order, and the court shall thereupon proceed in the manner provided by 
subsection (e) as if a petition for review had been filed. If objections are 
not filed within fifteen days of such service, the clerk of said court, un- 
less otherwise ordered by the court, shall forthwith enter a decree en- 
forcing the order of the Board. 

(Note: References to "the Administrator" deal with a separate proposal 
of the Cox Panel and can be deleted or supplanted by "the Board," as 
appropriate.) 

The "Puciyiski Subcommittee" Report 

(Report of the Subcommittee on the NLRB of the House 
Committee on Education and Labor, 1961) 

After noting that "by all odds, the witnesses stressed the delay 
in Labor Board processing of cases as the greatest impediment 
to effectuating the policy of the United States to encourage the 
practice and procedure of collective bargaining" (p. 8), and that 
"the Committee finds that there is much needless delay in en- 
forcement of Board orders" (p. 2), the Subcommittee made 
the following summary of the testimony received in its hearings : 

Enforcement and Review of Labor Board Orders 

The problem of delay in proceeding before the Labor Board is com- 
pounded by the further delay in gaining judicial enforcement of the 
Labor Board order. Labor Board orders are not self-enforcing. The 
Labor Board has no authority to punish for violation of its decrees. 
Should a defeated party in a Labor Board proceeding decide simply to 
ignore the Labor Board decree, the Labor Board must request the appro- 
priate court to enforce its order. This process takes, on the average, over 
a year. (Labor Board Member Boyd Leedom, then Chairman of the Labor 
Board, informed the Cox Panel in 1959 that the process of obtaining ju- 
dicial enforcement took 378 days.) 

Many defeated parties take advantage of this year's delay. Dominick 
L. Manoli, Associate General Counsel of the Labor Board, testified that: 

Over the past 10 years a little more than 50 percent of the 
Board's decisions and orders in unfair labor practice cases have been 
taken to court on either a petition for enforcement or a petition for 
review. The figure for fiscal 1960 was 52 percent. The highest recent 
figure was 73 percent in 1952 (tr. 178). 

But the year's delay in enforcement is not the only delay; much time is 
spent administratively prior to seeking judicial enforcement. Jacob 
Sheinkman, general counsel of the Amalgamated Clothing Workers of 
America, described the process as follows : 

After issuance of such (Labor Board) order, the case is returned 



REC. 10. REVIEW OF NLRB ORDERS 255 

to the regional office of the Board from whence it arose, and there 
efforts are made to secure voluntary compliance with the terms of 
the order. In many cases the offending party ignores the plea for 
voluntary compliance, and only then are steps initiated to secure ju- 
dicial enforcement by way of a decree of the appropriate U.S. court 
of appeals. It has been our experience that an average of at least 4 
months elapses from the date of the Board order until the necessary 
papers are prepared and enforcement proceedings commenced in the 
courts. 

The significance of these delays was pointed out by the testimony of Al 
Hartnett, secretary-treasurer of the International Union of Electrical, 
Radio, and Machine Workers: 

Mr. Hartnett. At the Greeneville Cabinet Co., in Greeneville, 
Tenn., a man was discharged because of union activity. He was dis- 
charged in April or May — I am not sure which it was — of 1950. We 
filed a charge. The case was first decided by the Board on February 
27, 1953. That is a long period of time between the time we filed the 
charge and the time the finding is finally made by the Board. The 
employer was told to reinstate three employees and to cease and de- 
sist in discouraging union membership. We did not get enforcement 
of that order even though it was issued on February 27, 1953, until 
February 8, 1954, almost 4 years elapsing between the time of the 
incident and the time we finally got enforcement of the order. * * * 

As the situation now stands, a Board order is issued. We stumble 
and fumble along. Nobody really makes any eff"ort to get it compiled 
with. Maybe there is a posting, maybe there is not. Finally, a suffi- 
ciently long period of time has gone by and enough pressure has 
been generated, maybe somebody finds their way into a courtroom to 
get enforcement of an order. * * * 

Congressman Roosevelt. Is there any effective date now within 
which an appeal from a Board order must be made? * * ♦ 

Mr. Hartnett. You can just delay, linger and wait. There is no 
time limit. Delay, linger, and wait. Stall as much as you can, wait as 
long as you can. By the time that somebody has gotten around to 
doing something about enforcing the Board order, 9 times out of 10, 
it is too late. The horse is gone, and the stable needs no locking at 
this point. 

Mr. Hartnett recommended the following: 

First, we believe that orders shall be self-enforcing, with the bur- 
den placed upon one who contests an order to seek its review within 
a set period of time rather than as it now is upon the Board to insti- 
tute enforcement proceedings. Second, we believe that Board orders 
should be effective for purposes of contempt proceedings pending re- 
view, unless the party seeking review can persuade the reveiwing 
court of cause to the contrary and obtain a stay of the Board's order 
* * *. We suspect that if the advantage of delaying the effectiveness 
of Board orders were eliminated from review and enforcement pro- 
ceedings, fewer Board orders would be conte.sted in court. The ad- 
vantages flowing from elimination of delay to those whose rights 



256 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

have been infringed and to the public interest in seeking those rights 
enforced are undeniable. (Prepared statement.) 

Mr. Guy Farmer, former Chairman of the National Labor Relations 
Board, and Mr. Louis Sherman, who served on the Cox Panel, gave joint 
testimony to the same effect : 

We have one very brief recommendation, although a very impor- 
tant one. * * * We recommend that Board orders, which are now of 
no effect until someone takes them into court to enforce, * * * be 
made self-enforcing after a given period of time during which a re- 
spondent would be given an opportunity to file a petition for review. 
If no such petition were filed within that time, the Board order 
would in effect become by filing in court a court order, and any viola- 
tion of that order would subject that violator to the normal con- 
tempt citations. 

The Subcommittee then made the following finding and recom- 
mendation : 

The subcommittee finds that there is much needless delay in enforce- 
ment of Labor Board decisions. The losing party "delays, lingers, and 
waits" because disobedience of a Labor Board order is not punishable. 

The subcommittee recommends a legislative change in sections 10(e) 
and 10(f) to require that, in the absence of an agreement to comply 
with the Board order, a petition for review of a Board decision and order 
must be filed within 30 days in the appropriate court of appeals by the 
party seeking review; that if no such petition is filed, the General Coun- 
sel would be required to forthwith file a copy of the Board decision and 
order in an appropriate circuit court of appeals of the United States 
and that notice of such filing would be sent to the respondent named in 
the order. An additional 15 days would then be given to the respondent 
after notice to seek review by the court. If no such review is requested 
within that time, the clerk of the court would then issue a decree enforc- 
ing the order of the Board. 

Statements of NLRB Officials Before the Pucinski Subcommittee 

in 1961 

Boyd Leedom, former chairman and present member of the 
NLRB: 

"I think the recommendation of the Cox committee should be adopted 
and the law changed so that our orders are, to use the phrase that has 
been applied, self-enforcing. . . . The thing that I think is bad and is dif- 
ferent in our agency than in some agencies, is that the aggrieved party 
can just sit and wait, incapable perhaps of finding any good grounds to 
present to the court, in petition for review. Notwithstanding that he 
just sits there and waits and raises no objections, we must go through a 
long and involved court proceeding in the circuit court of appeals to 
establish the validity of our order." (Hearings, p. 1056) 



REC. 10. REVIEW OF NLRB ORDERS 257 

Stuart Roth man, General Counsel of the NLRB : 

"I believe there is merit in the suggestion that the Board's unfair labor 
practice orders should be 'self-enforcing.' Under the present statutory 
scheme a Board order carries no sanctions until or unless it is enforced 
by a court decree. It has been said that the long — and frequently un- 
avoidable delay — between a Board decision and effective judicial decree 
enforcing that order has militated against effective enforcement of the 
Congressional policy in this area. To some extent at least this situation 
might be remedied by providing that a Board order shall become final 
unless within a specified time, say 60 days, the party against whom the 
order is directed petitions for judicial review. Absent such a petition 
timely filed, a decree should be entered enforcing the Board's order upon 
the Board's application for summary judgment." (Hearings, pp. 1108-9) 

"I favor the proposal such as that made by the Cox committee, and 
reiterate it, in effect, in my prepared testimony. To make the Board 
order self-executing would be helpful. I should point out that there are 
other reasons why some of these cases that you refer to, and I don't 
know the particular ones, may appear to have taken longer than they 
should have. In some of these cases I believe that it is the situation that 
they have taken longer than they should have. But there may be a period, 
of course, after the Board has issued its order where the regional office 
seeks to achieve voluntary compliance and watches the matter to see 
whether or not the respondent comes into compliance. And then there 
may be, by reason of the facts and circumstances of the particular case, 
some reason why it takes longer in one case than in another. There may 
be representations which have been accepted that the order would be 
complied with voluntarily. So there may be instances where a case has 
taken longer than it should. 

"It may be in such a case that the regional office and ourselves should 
have moved a little more rapidly than it has, to bring about enforce- 
ment. But in answer to your question, I support the idea of making 
Board orders self-enforcing." (Hearings, p. 1310) 

Frank W. McCulloch, present chairman of the NLRB : 

"I am quite ready to record my support for the suggestions that have 
been made about the possibility of amending the law to make the Board 
orders self-enforcing after a reasonable period for the filing of a petition 
for review by the respondents, and upon failure to so file, going into 
court, making the Board's orders self-enforcing, somewhat along the 
same line as has been done by the Federal Trade Commission." (Hear- 
ings, p. 1536) 

Gerald D. Reilly, former member of the NLRB, now an 
attorney representing employers, and a member of the "Cox 
panel": 

"If the legislation recommended by the Advisory Panel were adopted, 
all Board orders would automatically be filed for enforcement in the 
courts of appeals and would become final unless a petition for review by 
a party aggrieved was filed within 30 days. 

"The purpose of this provision is to avoid the long delays which now 
occur between a final order of the Board and the docketing of a petition 



258 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

for enforcement in the courts of appeals. It would also place the burden 
of obtaining review upon the losing party." (Hearings, p. 766) 

Guy Farmer, former chairman of the NLRB, now an attorney 
representing employers, and a member of the "Cox Panel" made 
the joint statement with a fellow panel-member, Louis Sherman, 
who represents unions, which the Subcommittee quoted in its 
report and recommendations. In addition, the following colloquy 
occurred : 

Mr. Pucinski: "This is a procedure followed in other agencies now, 
isn't it? 

Mr. Farmer: "The Federal Trade Commission is one agency that fol- 
lows this procedure." 

Mr. Pucinski: "And it could apply in labor-management relations, in 
your opinion?" 

Mr. Farmer: "I see no reason why it should not. Sometimes in the 
past, the Board for one reason or another, and perhaps because of work- 
load problems, there will be a great delay in filing a petition for review 
and the case is sort of left hanging there." (Hearings, p. 843) 

IV. Analysis of Probable Effect of the Cox Panel Proposal 

The objective would be to reduce the time within which an 
effective order can be obtained. Under the Cox Panel proposal, 
this would be accomplished by the Board order becoming an 
order of the Court of Appeals within 45 days, unless the respon- 
dent has petitioned for review within that time. 

The time periods which elapse under the present system during 
various stages of the enforcement procedure are revealed in the 
following statistics which have been supplied by Marcel Mallet- 
Prevost, Assistant General Counsel of the NLRB. 

Computation of days involved in case processing — 

The following information has been compiled from the files of the 
Appellate Court Branch. Both the average and median number of days 
are indicated.^ 



Number of days from issuance of Board's Decision and Order to referral 
of case to General Counsel for enforcement 

Fiscal 1959 Fiscal 1960 Fiscal 1961 

Average 62.0 69.8 58.2 

Median 35.8 43.0 37.9 



' Averages are obtained by dividing the total number of days involved in all the cases by the 
number of cases. Median figures indicate that fifty percent of the cases have longer time pe- 
riods than the median and fifty percent have shorter time periods. 



REC. 10. REVIEW OF NLRB ORDERS 259 

Number of days from referral for enforccmevt itnfil petition filed with 

Coierts of Appeal 

Rppfular plus 
Regular cases suspended cases 

Fiscal 1959 

Average 74.3 81.8 

Median 67.5 69.4 

Fiscal 1960 

Average 76.6 82.9 

Median 69.6 70.8 

Fiscal 1961 

Average 44.8 51.0 

Median 44.0 46.8 

Action on cases after referral is sometimes suspended for various 
reasons, such as, to allow the Regional Office time to negotiate com- 
pliance of settlement, or to refer the case to the Board for further con- 
sideration. This delays the filing of the petition. In 1961 there were 16 
such cases out of a total of 153 enforcement referrals. Accordingly, the 
"Regular Cases" column more accurately reflects the flow of work. 

Number of days from filing of petition to decision by Courts of Appeal 



Average 
Median 



iscal 1959 


Fiscal 1960 


Fiscal 1961 


250.9 


261.4 


313.0 


236.7 


262.5 


240.5 



Speaking in very round figures, it takes about 50 days from 
the date of the Board's order to the date when the case is referred 
to the General Counsel for enforcement. Again in very round 
terms, it takes another 50 days until a petition for enforcement 
is filed, or a total of 100 days before the average case reaches 
the Court of Appeals. The Cox Panel proposal would reduce this 
to 30 days, and if the respondent did not petition for review 
within an additional 15 days, the Board order would become 
the order of the Court, Of course, if the respondent does petition 
for review, the present proposal would not affect the amount of 
time that is consumed in trying the case in the Court of Appeals — 
roughly 250 days. 

The principal effect of the proposal would be to require the 
respondent to make up his mind promptly whether to seek review. 
It would probably assist in achieving compliance with the orders 
of the Board by putting pressure on the respondent to reach this 
decision. As indicated in the testimony before the Pucinski 
Subcommittee, there is reason to believe that in a substantial 
number of cases, the respondent delays compliance while the 



■Compliance before 
CA decision: 


Percent 


31 


20 


33 


16.7 


59 


26 


72 


23.6 



260 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

Board is going through the rather slow process of seeking an 
enforcement order. The following figures, supplied by Marcel 
Mallet-Provost, Assistant General Counsel of the NLRB, seem to 
bear that conclusion out. 

Cases in which respondent complied after referral to General Counsel for 
enforceynent and before Court of Appeals decision 

Fiscal year Referred 

1959 155 

1960 197 

1961 222 

1962 305 

According to Mr. Mallet-Provost, most of the cases of compli- 
ance occurred after the petition for enforcement was filed with 
the Court of Appeals and sometimes after the Board's brief was 
filed. 

One of the principal advantages under the proposed procedure 
would be the saving of time and effort on the part of the Board's 
attorneys in this type of case. Where the Board seeks the en- 
forcement order, it must prepare a brief justifying the Board 
position on points which may not be contested by the respondent. 
Putting the burden on the respondent to seek review would have 
the advantage of focusing attention on the particular points 
which he wants to contest. 

It is not believed that the proposed procedure would shift the 
"burden of proof" before the Court of Appeals. Whether the 
respondent is petitioning for review or the Board is petitioning 
for an enforcement order, the statutory test of "substantial 
evidence on the record considered as a whole" would apply in 
either situation. 

The proposed procedure would not appear to create difficulties 
with respect to back pay proceedings. Even where the order of 
the Board becomes the order of the Court after 45 days, later 
controversies over the amount of backpay due can be handled in 
the present manner by filing a motion with the court asking 
that it direct the party objecting to the backpay award to indi- 
cate its grounds for stating that the Court's decree should not 
be amended to include the amounts of backpay the Board has 
found due. (See Mr. Manoli's summary of this procedure, supra, 
p. 6.) 

The proposed procedure would have a salutary effect upon 
compliance discussions in the Regional Offices. These have a 



REC. 10. REVIEW OF NLRB ORDERS 261 

tendency to become lon^ and drawn-out, and the 30-i)lus-l 5-day 
provisions for the Board's order to become an effective order of 
the Court would speed them up. Of course, the respondent retains 
the full ri^ht of judicial review, but if he wishes to challenge 
the Board order, he must take the responsibility of .seeking the 
review. It should be noted that respondents frequently petition 
for review under present procedures, particularly where some 
choice as to the Circuit is involved. Out of 97 briefs filed by the 
Appellate Court Branch in the Courts of Appeals in fiscal year 
1960, for example, 23 were on an aggrieved person's petition 
for review, as distinguished from a petition by the Board for an 
enforcement order. 

V. Comparison with Enforcement Procedures of the 
Federal Trade Commission 

At the time when the National Labor Relations Act was passed 
in 1935 the statutes governing the work of the Federal Trade 
Commission required the F.T.C. to obtain an enforcement order 
from the Court of Appeals before its orders carried any sanction. 

However, the Federal Trade Commission Act was amended in 
1938 and the Clayton Act was amended in 1959 so as to make 
F.T.C. orders "self-enforcing." At the present time, a cease and 
desist order becomes final 60 days after date of service upon the 
respondent, unless within that period the respondent petitions 
an appropriate Court of Appeals for review. In case of review, 
the F.T.C. order becomes final after affirmance by the Court of 
Appeals. Violation of a cease and desist order after it becomes 
final subjects the offender to suit brought by the Department of 
Justice in a U.S. District Court for recovery of a civil penalty 
of not more than $5,000 for each violation. In the case of a con- 
tinuing violation, each day of its continuance is a separate of- 
fense. Violation of an F.T.C. order which has been affirmed by 
a decree of a Court of Appeals makes the respondent further 
vulnerable to contempt proceedings in that court. 

Thus, while the NLRB proposal recommended by the Cox 
Panel and the Puccinski Subcommittee is "adapted from" the 
current F.T.C. procedures, there are substantial differences. The 
NLRB proposal would rely on making an NLRB order become 
an order of the Court of Appeals within 45 days, in the absence 
of a petition for review by an aggrieved person, and thus subject 
to the ultimate contempt-of-court sanction. The Cox proposal 
would not make the NLRB order itself "final" in the sense of 
carrying a civil penalty sanction. 



262 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

Apparently the enforcement procedures at the F.T.C. were 
more attenuated, prior to the 1938 and 1959 amendments, than at 
the NLRB, as is indicated by the legislative history of the 1959 
amendments. The situation under the F.T.C. Act and the Clayton 
Act was thoroughly described by Sigurd Anderson, member of 
the F.T.C. : 

Under both acts (the Federal Trade Commission Act and the Clayton 
Act), the Commission must investigate and, after complaint, prove on the 
record developed during hearings violations of the act before orders to 
cease and desist may issue. Although the two acts, as originally enacted, 
contained similar provisions for the enforcement of such orders, Con- 
gress, on the occasion of the passage in 1938 of the Wheeler-Lea amend- 
ment to the Federal Trade Commission Act, provided for the finality of 
orders issued under that act. As stated by the House Committee on In- 
terstate and Foreign Commerce at page 4 of report No. 1613, 75th Con- 
gress, 1st session, on S. 1077: 

The provisions of subsections (g) to (k) of section 5, inclusive, are 
for the purpose of making definite and certain when the Commission's 
orders to cease and desist become final, and are similar to those found 
in the Revenue Act of 1926, fixing the time when the orders of the 
Board of Tax appeals become final. 

Under the Federal Trade Commission Act, by reason of the 1938 Wheeler- 
Lea amendment, an order to cease and desist becomes final upon the ex- 
piration of the time allowed for filing a petition for review, if no such 
petition is filed within that time. Once an order has become final, the 
Commission can certify the facts of a violation to the Attorney General 
who may then proceed in an appropriate district court for the recovery 
of civil penalties. In contrast, the Clayton Act contains no provision for 
finality of the order and no procedure for the securing of civil penalties 
for violations thereof. 

Existing procedures under the Clayton Act are laborious, time consum- 
ing, and expensive. After a Clayton Act order to cease and desist has 
been issued, following investigation, complaint and proof of violation on 
the record, the Commission must again investigate and again prove vio- 
lations of the order and of the act before the Commission's order to cease 
and desist. Only then, if the respondent violates the act a third time, by 
virtue of being in contempt of court, does he become subject to penalty. 
Thus, before a respondent can actually be punished for violation of the 
Clayton Act, as amended by the Robinson-Patman Act, the Federal 
Trade Commission must conduct three successive investigations and must 
on three successive occasions prove violations of the law. 

As the Clayton Act now stands, a person found to have violated that 
act is not made subject to an effective order to cease and desist. The 
original proceeding at Commission level is a preliminary skirmish pre- 
requisite to the Commission's going to court with respect to a subsequent 
violation. And it is only the court's order, issued after the subsequent 
showing of violation, that compels obedience. 

The effectiveness of the Clayton Act has long been handicapped by the 
absence of adequate enforcement provisions. The proposed legislation 



REC. 10. REVIEW OF NLRB ORDERS 263 

would fill this enforcement void. The need for the amendatory legislation 
became even more pressing in 1952 when the Supreme Court decided 
Federal Trade Commission v. Ruheroid, 343 U.S. 470. Prior to that deci- 
sion, the Commission proceeded for enforcement of Clayton Act orders by 
cross-petition in cases where respondents had petitioned for review in the 
U.S. courts of appeals. In Ruberoid, the Supreme Court held that the 
courts were without authority to issue an order commending obedience to 
an order of the Commission under the Clayton Act until the Commission 
had established violations of its order. Commenting on this holding, Jus- 
tice Jackson stated in dissent: 

I see no real sense, when the case is already before the court and is 
approved, in requiring one more violation before its obedience will be 
made mandatory on pain of contempt. 343 U.S., at page 494. 

It is indeed an anomaly that orders issued by the Commission in fur- 
therance of the general proscriptions of the Federal Trade Commission 
Act have finality, whereas orders issued following violations of the more 
specific prohibitions of the Clayton Act do not. Not only is the present 
situation anomalous, but the Clayton Act stands incomplete until such an 
amendment as that proposed is enacted. The Commission believes that 
proper implementation of an effective antitrust policy requires correction 
of this situation. 

The Commission has been aksed to comment on objections to the bills 
contained in statements submitted by the American Bar Association and 
the Association of the Bar of the city of New York. 

The American Bar Association has characterized the Commission's po- 
sition of favoring the legislation as simply a plea for uniformity of en- 
forcement procedure for Commission orders, whether issued under the 
Clayton Act or the Federal Trade Commission Act. We believe that this 
contention has already been answered in the foregoing portion of this 
statement where we have demonstrated that the proposed legislation is 
required to provide compliance with an act which the Congress undoubt- 
edly intended should be enforced. 

Both bar associations stress an assumed "right" or a respondent not to 
have to go to court as long as he is willing to comply with the order to 
cease and desist which has been issued against him. This position totally 
ignores the right and the interest of the public in having an effective 
order outstanding against a law violator. 

The Commission's order is issued in the course of an adjudicative pro- 
ceeding wherein a respondent has been found to have violated a law en- 
acted by the Congress. Provision should be made for the completion of 
such an adjudication. The logical sequence of events should be that if a 
respondent objects to a Commission order for any reason, he should ap- 
peal to a court within a reasonable time so that the matter can be de- 
cided once and for all. He should not be allowed to sit back, possibly for 
years, and then not only contest the charges of a new violation, but be in 
a position to challenge all of the aspects of the original case upon which 
the Commission's order was based, as well as that order itself. Congress 
has already expressed its disapproval of such a frustrating and compli- 
cated procedure in its consideration and pass^age of the Wheeler-Lea 
amendment to the Federal Trade Commission Act. 



264 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

The bar associations attempt to buttress their argument by making a 
general attack upon the breadth of the Commission's Clayton Act orders. 
This attempt confuses the problem of drafting appropriate orders in 
particular cases with the questions of whether orders should be made 
final. There is no relevancy between the two subjects. No one would sug- 
gest that courts be deprived of their injunctive powers because of a dis- 
agreement in a particular case with the specific order entered. And, in 
any event, the proposed legislation provides for adequate court review of 
Commission orders. 

The Commission cannot discuss the question of the appropriate 
breadth of orders in a vacuum. Suffice it to say that in the very case 
relied upon by the American Bar Association in support of its argument, 
Federal Trade Commission v. Ruberoid, 343 U.S. 470, the majority of the 
Court decided that the Commission was justified in issuing the order that 
it did and upheld the court of appeals' affirmance of that order. 

Whatever the challenge to a Commission order may be, the Commis- 
sion feels that challenge should be raised in court within a reasona- 
ble time after the Commission's adjudication, at which time all of the pro- 
tections which the American Bar Association urges would be available to 
the respondent. 

Both bar associations oppose the proposed provision for civil penalty 
of not more than $5,000 for each violation of the final order with each 
day of a continuing violation being deemed a separate off'ense. They state 
that the penalty is too severe and point to the fact that the majority of 
penalties imposed under such a provision in the Federal Trade Commis- 
sion Act have been for less than $1,000 per count. 

The monetary and other economic interests involved in Clayton Act 
proceedings are substantial and orders to cease and desist, though made 
final, would be ineff'ective unless adequate civil penalties are provided. 
Under the comparable provision in the Federal Trade Commission Act, 
various penalties in excess of $1,000 per count have been imposed and 
there have been three judgments, one by default, where full $5,000 pen- 
alties for single violations were assessed. It can be assumed that in- 
stances may also arise under the Clayton Act where violations will merit 
the full $5,000 penalty or some figure in excess of $1,000. 

In considering the possibility of the proposed provision constituting an 
onerous burden upon respondents, it is important to recognize that the 
$5,000 figure per violation is the maximum amount that may be imposed. 
It is to be assumed that courts would, under the Clayton Act as they 
have under Federal Trade Commission Act, exercise their judgment to 
impose appropriate penalties. It is interesting to note the following dis- 
cussion of penalty provisions by the House Committee on Interstate and 
Foreign Commerce at the time it reported on the then proposed 
Wheeler-Lea amendment to the Federal Trade Commission Act: 

Subsection (1) provides that any person, partnership, or corporation 
who fails to obey an order of the Commission to cease and desist after 
it has become final, and while it is in effect, shall forfeit and pay to 
the United States a civil penalty of not more than $5,000 for each 
violation, which shall accrue to the United States and may be recov- 
ered by a civil action brought by the United States. The object of the 
provision is to enforce obedience to the Commission's orders to cease 



REC. 10. REVIEW OF NLRB ORDERS 



265 



and desist after such orders have become final throup:h approval of 
the courts or throuf^h the failure of respondents to seek review. Sim- 
ilar provisions are contained in the Packers and Stockyards Act of 
1921 (sec. 195, title 7, U.S.C.A.) and in the Securities Exchange 
Act of 1934 (sec. 78y(a), title 15, U.S.C.A.) (Hearings on Finality 
of Clayton Act Orders, before the Antitrust Subcommittee of the 
Committee on the Judiciary, House of Representatives, 86th Con- 
gress, First Session, May 27, 1959, pp. 17-20). 

From 1938 to 1959, there were 92 cases under Section 5 of 
the FTC Act in which civil penalties were assessed. The highest 
single case penalty was $38,000, and the penalty in the great bulk 
of the cases amounted to from $1,000 to $5,000. (See pp. 28-29 
of the above House Judiciary Subcommittee Hearings for a com- 
plete list) . 

In the fiscal year of 1962, the amounts of civil penalties as- 
sessed in FTC Act cases were as follows : 



Docket 


Name of Case 


Court 


Concluded 


Judgment 


6222 


Vulcanized Rubber & Plastics 
Company. 


E.D. Pa. 


10-9-61 


$6,000 


6086 


Empire Press, Inc., et al 


N.D. 111. 


12-5-61 


Injunction 


6089 


Personal Drug 


E.D. N.Y. 


12-8-61 


$2,000-Inj. 


5342 


National Toilet Company 


Tenn. 


12-19-61 


$5,000 


6426 


Sterling Materials Company, 
Inc. et al. 


E.D. N.Y. 


2-6-62 


$11,000 


6426 


Carbozite Protective Coatings 


E.D. N.Y. 


2-6-62 


$11,000 


6426 


Ohmlac Paint & Refining 
Company. 


E.D. N.Y. 


2-6-62 


$6,000 


6140 


George's Radio & Television 
Company. 


D.C. 


2-2-62 


$6,000 


5975 


National Educators, Inc., et. 

al. 
Sun Vacuum Cleaner 


D.C. 


2-12-62 


$8,000 


6342 


Md. 


2-21-62 


$3,000-Inj. 




Company. 








3964 


Fong Wan, et al 


N.D. Cal. 


6-4-62 


$1,300 


3639 


Parf ums Corday 


S.D. N.Y. 


6-6-62 


$13,000 


6916 


Fire Safety Services, Inc., 
et al. 


Md. 


6-11-62 


$28,000 


6644 


Magic Weave, Inc., et al. 


Mass. 


6-28-62 


Injunction 



(Supplied by Barry W. Stanley of F.T.C.) 

It can be seen from these figures that the potentially high 
$5000-a-day penalty has not, in practice, resulted in unconscion- 
ably high penalties. 

The processing of these civil penalty cases is slowed up and 
the enforcement is made less eflScient than it could be by the 
fact that the proceedings are brought by the various U.S. At- 
torneys throughout the country. The extent to which the legal 



266 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

staff of the FTC participates in these cases varies considerably 
among the offices of the U.S. Attorneys. 

As to the experience under the 1959 "Finality" Amendments 
to the Clayton Act, there is very little to date. Only two civil 
penalty cases have been filed and they are still at the discovery 
stage. {FTC v. Time Magazine and FTC v. Hearst, both in the 
U.S. District Court for the Southern District of New York). 
The lack of experience with the operation of the 1959 amend- 
ments is largely due to the holding of the courts that the "Finality 
Amendments" apply only to FTC orders under the Clayton Act 
which became final after the effective date of the 1959 Amend- 
ments. Thus if a respondent violates today an FTC order issued 
before that effective date, the civil penalty provision does not 
apply. See Sperry Rand Corp. v. FTC, 228 F.2d 403 (CADC, 
1961). 

One effect of the 1959 Amendments to the Clayton Act has 
been to focus attention of the need for clear and precise cease 
and desist orders where the respondent is vulnerable to civil 
penalties. In FTC v. Henry Brock and Co., 82 Supp. Ct. 431, 436 
(1962) , the U.S. Supreme Court stated : 

We do not wish to be understood, however, as holding that the generalized 
language of paragraph (2) (of the commission's order) would necessar- 
ily withstand scrutiny under the 1959 amendments. The severity of possi- 
ble penalties prescribed by the amendments for violations of orders which 
have become final underlines the necessity for fashioning orders which 
are, at the outset, sufficiently clear and precise to avoid raising serious 
questions as to their meaning and application. 

In summary, it is too early to assess the effects and workability 
of the 1959 Amendments to the Clayton Act, but the similar 
procedure of making orders final after a fixed period of time 
under the 1938 Amendments to the FTC Act has worked fairly 
well, and is certainly a considerable improvement over the pre- 
existing system. 

VI. Conclusion 

Professor Leroy S. Merrifield, special consultant to the Com- 
mittee on Judicial Review, has talked informally with Archibald 
Cox, Russell Smith, and Guy Farmer. They do not recall the 
precise source of the proposal within the Advisory Panel, but 
Mr. Cox stated that it was obviously adapted from the Federal 
Trade Commission procedure. Mr. Smith recalls that Arthur 
Goldberg favored the proposal. There were no comprehensive 
studies or memoranda prepared on the matter within the Panel. 



REC. in. REVIEW OF NLRB ORDERS 267 

Professor Merrifield has also talked informally with Stuart 
Rothman, Dominick Manoli, Marcel Mallet-Provost, A. Norman 
Somers and Melvin Welles at the NLRB, who are or have been 
responsible for enforcement proceedings in the Courts of Appeal. 
They all would favor the Cox Panel proposal. 

The proposal appears to have attracted wide support from 
Board members and officials and from reputable attorneys for 
both management and labor. Opposition might come from those 
employer interests who find it advantageous to seek delay. Unions 
would probably be more inclined to favor it; the impact would 
probably fall more on employers than on unions, since the 
employers already have the benefit of "mandatory" injunctions 
against the more important union unfair labor practices under 
section 10(1) of the Act. 

It is our conclusion that it is necessary to eliminate delay 
wherever possible in NLRB procedure in order to have an ef- 
fective law; that the proposal of the Advisory Panel headed by 
Archibald Cox is basically sound and would result in an average 
time saving of something like 55 days in getting an effective 
order without foreclosing in any way a full opportunity for judi- 
cial review. 



RECOMMENDATION NO. 11 

PUBLICATION OF A "GUIDE TO FEDERAL REPORTING 

REQUIREMENTS" 

Popular demand for the official index digest entitled "Guide to 
Record Retention Requirements" indicates that a companion piece 
covering the matter of Federal reporting requirements would 
serve a public need. 

RECOMMENDATION 

1. Each agency subject to chapter 35, title 44, United States 
Code, entitled "Coordination of Federal Reporting Services," 
should make separate digests of and citations to each statutory- 
provision and each regulatory provision relied upon by the agency 
for the solicitation of information as contemplated by chapter 
35. 

2. After consultation with the Bureau of the Budget, the 
Director of the Federal Register should prescribe the style, 
coverage, and submission of such digests, and should publish the 
overall "Guide to Federal Reporting Requirements" in the Fed- 
eral Register in the same manner used for the publication of 
the "Guide to Record Retention Requirements." 



268 



REPORT OF THE COMMITTEE ON INFORMATION, EDU- 
CATION, AND REPORTS IN SUPPORT OF RECOMMEN- 
DATION NO. 11 



The idea of compiling a guide to reporting requirements was 
born at the time the guide to record retention requirements 
was being planned in 1955. At that time it appeared wise to let 
compliance with the Federal Reports Act, as amended (44 U.S.C. 
3501-3511) mature over a longer period before undertaking such 
compilation. 

The success of the annual Guide to Record Retention Require- 
ments has been notable. The time now seems right to bring out 
the companion piece covering reporting requirements. 

Annual distribution of the Guide to Reco7^d Retention Re- 
quirements has gone over 57,000 copies, of which about 51,000 
represent paid mail orders. This clearly demonstrates a public 
need. Even more remarkable is the collateral salutary effect of 
presenting the requirements in one concise package. Official and 
private comparison resulted in self criticism and a marked tend- 
ency to imitate the best examples demonstrated by the Guide. 

There would seem to be every reason to believe that a guide 
to reporting requirements will be equally popular, and that visual 
proximity will lead to corresponding improvements by way of 
imitation of the best examples. 

The format of the proposed guide to reporting requirements 
and the matters of printing and distribution would follow closely 
the example of the Guide to Record Retentio7i. Because of dif- 
ferences in the statutory provisions, the procedures and stand- 
ards governing compilation and coverage would be somewhat 
different. 

Under the provisions of 44 U.S.C. 3501-3511, the Bureau of 
the Budget has primary responsibility for administering the 
matter of Federal reporting requirements. The coverage of the 
guide will be limited by the terms of the statute and of the 
decisions and rules issued by the Director of the Bureau of the 
Budget. (See BOB Circular A-40, revised February 12, 1968. 

With these considerations in mind, the Committee submits 
that the proposed "Guide to Federal Reporting Requirements" 
will (1) make important information more readily and authori- 

269 



270 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

tatively available to the public; (2) tend to improve the fairness 
and uniformity of reporting requirements; and (3) assist the 
Bureau of the Budget in controlling compliance w^ith the perti- 
nent statutory provisions. 

The following is offered as an example of a potential entry in 
the guide : 

XVII. Federal Trade Commission 

1. Export trade associations. Statement setting forth location 
of offices, names and addresses of officers, stockholders, and mem- 
bers, together with copies of certificates or articles of incorpora- 
tion and bylaws, or copies of articles or contract of association. 

Timing: Within 30 days after the association's creation and on 
January 1 of each year thereafter. 15 U.S.C. 65 



RECOMMENDATION NO. 12 

ANALYTICAL SUBJECT-INDEXES TO SELECTED VOL- 
UMES OF THE CODE OF FEDERAL REGULATIONS 

Currently the Code of Federal Regulations is updated annu- 
ally by the issuance of some 112 revised books. Many of these 
books are self-indexing. The usefulness of some books may be 
greatly impaired by the lack of an analytical subject index. 

RECOMMENDATION 

1. Each agency contributing substantially to the CFR should 
review its materials and (a) determine what books should include 
an analytical subject index, and (b) arrange for the prepara- 
tion and publication of requisite indexes. 

2. The Office of the Federal Register should review proffered 
indexes and arrange for the publication of those that appear to 
be professionally adequate. 



271 



REPORT OF THE COMMITTEE ON INFORMATION, EDU- 
CATION, AND REPORTS IN SUPPORT OF RECOMMEN- 
DATION NO. 12 



The general and permanent rules of Federal agencies are 
codified in the Code of Federal Regulations under functional 
titles which represent broad subject areas. This orderly arrange- 
ment is somewhat self-indexing. At the beginning of each book 
there is a contents listing which gives the user an overall view 
of the subject coverage, and within each book there are listings 
of the headings of the various sections included. As an additional 
retrieval aid, a general subject guide called the CFR Index is 
published separately and revised each year. 

The CFR Index, however, is not a detailed analysis of the 
provisions in the Code. Rather, it serves as a general guide to 
regulatory areas. While this may be adequate for much of the 
Code, some individual volumes appear to need analytical subject 
mdexes because of the nature of the material covered. The ad- 
ministering agency may be the only source of the technical 
program knowledge needed to prepare an in-depth analysis by 
subject matter. 

Some agencies prepare subject indexes to their own regula- 
tions for in-office convenience and for separate publication. These 
might be adapted for use in the Code with little change. One 
example is already available. Title 35 of the Code of Federal 
Regulations contains a detailed subject index to the Canal Zone 
Regulations which was prepared by the agency and now is 
carried in the CFR under arrangement with the Office of the 
Federal Register. 

All agencies covered by 5 U.S.C 552 should evaluate their 
regulations as published in the CFR to determine whether de- 
sirable assistance can be given to the public by the inclusion in 
the CFR of a comprehensive subject index to any given book. 
When such index appears warranted, the agency should prepare 
it for transmittal to the Office of the Federal Register for publi- 
cation as part of the book involved. 



272 



RECOMMENDATION NO. 13 

ELIMINATION OF DUPLICATIVE HEARINGS IN FAA 
SAFETY DE-CERTIFICATION CASES. 

RECOMMENDATION 

The Federal Aviation Administrator has authority to revoke 
or suspend the licenses of aviation personnel and training facili- 
ties, airv^orthiness certificates, and other permits related to the 
operation of aircraft. Present procedures contemplate a full trial- 
type hearing, if one is desired by the respondent, before the 
Administrator issues an order of suspension or revocation. If 
an appeal is taken from that order, a second full hearing is 
afforded by the National Transportation Safety Board. This is 
wasteful of time and personnel, and is unnecessary as a pro- 
tection of affected parties. 

In order to expedite proceedings bearing directly on public 
safety, without sacrificing the interests of individual respondents, 
the Federal Aviation Administrator should discontinue providing 
hearings in the nature of trials in "certificate actions." This will 
not result in "punishment before trial," since the effective date 
of a certificate action order is invariably postponed, except in 
emergency situations, pending the outcome of proceedings before 
the National Transportation Safety Board. 



273 



REPORT OF THE OFFICE OF THE CHAIRMAN IN 
SUPPORT OF RECOMMENDATION NO. 13 

Prepared by 

David E. Kartalia 

Staff Attorney 



I. Scope and Background 

Under Title VI of the Federal Aviation Act of 1958,^ the 
Administrator of the Federal Aviation Agency may issue and 
"amend, modify, suspend, or revoke" a variety of air safety 
certificates. This report deals with the procedure in formal de- 
certification cases, i.e., actions to amend, modify, suspend, or 
revoke outstanding certificates. As discussed more fully in Part 
II below, this procedure is of particular interest because it per- 
mits a single case to be tried twice at the administrative level. 

The certificates subject to this de-certification, or "certificate 
action," process fall into seven statutory categories.- Certificate 
of the first two categories known as "type" and "production" 
certificates respectively, evidence the Administrator's satisfac- 
tion that the interests of safety have been adequately protected 
in the development and production of aircraft and aircraft com- 
ponents. "Airworthiness certificates," a self-explanatory term, 
are the third category of certificates; these are issued to regis- 
tered owners of aircraft. "Air carrier operating certificates," the 
fourth category, should not be confused with certificates of air 
carrier route authority issued by the Civil Aeronautics Board; 
the FAA certificates relate only to the safety aspects of an air 
carrier's enterprise. The fifth category, "airman certificates," is, 
for reasons stated below, the most important category so far as 
this study is concerned. These certificates license the activities 
of pilots and other flight crew members, flight instructors, air- 
craft mechanics, dispatchers, control-tower operators, and even 
parachute riggers. The sixth category of certificates attests to 



M9 U.S.C. §§ 1421-30 (1964). 

2 See 14 U.S.C. §§ 1422-24 and 1426-27 (1964). 

274 



REC. 18. FAA SAFETY HEARINGS 275 

the suitability of "air navigation facilities." Finally, the seventh 
category, "air agency certificates," involves judgments as to the 
adequacy of training schools, repair stations, and so forth. 

Although the process under examination applies to all of the 
foregoing certificates, the practical significance of the process 
is much more limited. The respondent in a formal certificate 
action proceeding is almost always an airman, and usually a 
pilot. The experience of the FAA's hearing officers during fiscal 
years 1967 and 1968 illustrates the pattern just described. Out 
of 227 ne-w cases received by the hearing officers in that 24- 
month period, 226 involved airman certificates; and of those 
226 cases, 203 involved pilots' licenses. The balance of 23 was 
distributed among mechanics (20), flight engineers (2), and 
flight navigators (1).^ For the sake of convenience, and in rec- 
ognition of the predominant impact of the formal certificate 
action process, this report occasionally refers to the respondent 
in a certificate action case as "the pilot." 

Although certificate action cases have been characterized as 
"remedial," they are generally punitive in the sense that a sanc- 
tion is sought to be imposed because of alleged improper con- 
duct. The typical case involves a pilot who is accused of violating 
one of the FAA's flight regulations. Similarly, mechanics usually 
become involved in the process upon being accused of not meet- 
ing applicable Agency standards in the performance of specified 
repair, maintenance or inspection work. 

The Federal Aviation Agency closes well over 1,000 certificate 
action cases each year. In most of these cases the respondent 
ultimately surrenders his certificate without receiving a formal 
hearing. The cases which are closed after formal adjudicatory 
proceedings account for only 10 to 20% of the total. ^ 

Certificate action is only one of two sanctions available to the 
Administrator in the conduct of his air safety enforcement pro- 
gram. The other sanction is the monetary fine, or "civil penalty." ' 
Although the Administrator's civil penalty power is used ex- 
tensively, the applicable procedure is entirely different from that 
in certificate action cases and is, therefore, excluded from the 
scope of this report. Civil penalty cases are either compromised 
informally or referred by the FAA to the Department of Justice 
for collection in court." 



^ Source : FAA docket sheets. 

* See note 19 infra. 

«49 U.S.C. § 1471(a)(1) (1964). 

«49 U.S.C. §§ 1471(a)(2), 1474(b)(1) (1964). 



276 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

II. The Problem 

A pilot who is confronted with proposed certificate action 
enjoys a procedural option which fairly invites inquiry. In brief, 
the pilot may elect to go to trial upon the decidedly favorable 
principle, "Heads I win, tails we flip again." To take advantage 
of this opportunity, the pilot must request the "formal hearing" 
proffered by the Administrator's Notice of Proposed Certificate 
Action, This hearing will be conducted before an FAA "hearing 
ofl[icer" under procedural rules which provide for the essential 
trappings of a trial." Accordingly, the burden of proof will be 
on the Administrator rather than the pilot.^ 

If the airman prevails at the FAA trial, the action is termi- 
nated. His adversary, the agency enforcement staff, has no re- 
course, because the Administrator has granted the hearing of- 
ficers the power to decide certificate action cases in his name 
and stead. ^ But the pilot, on the other hand, is in no respect 
bound by an adverse decision of the FAA hearing officer. He may 
"appeal" his case to the National Transportation Safety Board 
and there receive a trial de novo before one of the Board's APA 
hearing examiners.^" As before, the FAA staff will carry the 
burden of proof." 

The second trial in a certificate action case is usually a trial 
de novo in the literal sense of that term. That is, the findings 
of the FAA hearing officer and the record compiled before him 
are simply ignored in the second proceeding. In a few cases, 
the respondent has entered into a stipulation permitting all or 
part of the FAA record to be introduced into evidence before 
the NTSB examiner, but such action is not at all common. Thus, 
from the perspective of parties who are retrying a certificate 
case before a Board examiner, the FAA trial was a trial in name 
only; in retrospect, it was more a combination dress rehearsal 
and deposition session. 

This procedure was described above as an option of the pilot. 
The characterization is appropriate because the pilot need not 
exhaust any FAA remedy before taking his case to the NTSB. 
He may simply avoid any dealings with the FAA, allow the 
proposed certificate action to ripen into final action, and then 
file his appeal with the NTSB. He may also file an appeal after 



' 14 C.F.R. §§ 13.31-67. 
«14 C.F.R. § 13.59(b). 

"14 C.F.R. § 13.67(a). However, the hearing officer may not impose a sanction more severe 
than that specified in the notice of proposed certificate action. 
'"See 14 C.F.R. §§ 421.21-.50. 
" 14 C.F.R. § 421.22. 



REC. 13. FAA SAFETY HEARINGS 277 

taking advantag'e of the FAA's informal remedial procedures. 
Under FAA rules, each recipient of a Notice of Proposed Certi- 
ficate Action is to be offered an opportunity to answer the charges 
in writing or to be heard in informal conference with FAA 
counsel. 

Approximately 100 cases per year are appealed to the NTSB 
without passing through the FAA formal hearing process.'- This 
number does, however, include so-called "emergency appeals." 
Emergency cases are those in which the Administrator has 
chosen to exercise his statutory power to make his order effective 
pendente lite. Such cases are not subject to the FAA formal 
hearing procedures; if contested, they go directly to the NTSB. 
An idea of the frequency of emergency appeals can be obtained 
from the fact that the Board disposed of 23 such cases during 
fiscal 1969. It is thus clear that airmen do not invariably take 
advantage of the two-trial process when it is available. Appar- 
ently, a significant number sacrifice this additional protection 
for the more expeditious direct appeal to the Board. 

A study of cases docketed by FAA hearing officers during 
the 24-month period ending on June 30, 1968, disclosed that 
hearing officer decisions are appealed with some degree of reg- 
ularity. The flow of cases between FAA hearing officers and 
NTSB examiners is not patently alarming, but neither is it de 
7ninimis. To illustrate, the FAA hearing officers received 227 
cases during the subject period, and ultimately issued appealable 
orders (i.e., imposed certificate action) in 131 of them. A total 
of 51 were subsequently re-tried before the NTSB. In terms of 
an absolute number, this suggests an average of 25 cases moving 
each year to the NTSB for a second trial. In terms of percentages, 
it suggests that about 22% (51/227) of all new cases, and 
about 39% (51/131) of all appealable cases, are in fact tried 
twice. 

These figures demonstrate that a respectable amount of gov- 
ernmental energy is dissipated by reason of the two-trial feature 
of the certificate action process. The question, of course, is 
whether it is not avoidable. It is certainly a basic assumption of 
our legal system that a defendant can be accorded "justice" in 
an adjudicatory system based on but one trial. Fortunately, the 
certificate action process does not force us to re-examine this 
assumption. The history of that system, as set forth in parts 
III and IV below, shows that the two-trial feature exists more 
through sufferance than design. 



^ According to statistics supplied by the FAA for fiscal years 1966, 1967 anil 1968. 



278 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

III. Certificate Action: The Statutory Framework 

Section 609 of the 1958 Act^"* prescribes certain procedures 
for certificate action cases. Except in "emergency" cases, the 
Administrator is required by Section 609 to initiate a certificate 
action case by advising the certificate holder of the proposed 
action and the basis therefor. The Administrator must then 
afford the holder "an opportunity to ansv^er any charges and be 
heard as to v^^hy [his] certificate should not be amended, modi- 
fied, suspended, or revoked." Thereafter, if the Administrator 
determines that "safety in air commerce or air transportation 
and the public interest" so requires, he may put his proposed 
action into effect. 

Section 609 also provides that any certificate action order may 
be appealed to the National Transportation Safety Board, v^^hich, 
"after notice and hearing", may "amend, modify or reverse the 
Administrator's order." The Board, in the conduct of its hearing, 
is not "bound by the findings of fact of the Administrator." 
The Board's decisional touchstone is, like the Administrator's, 
phrased in terms of the requirements of "safety in air commerce 
or air transportation and the public interest. 

Emergency cases, as heretofore noted, are cases in v^^hich the 
Administrator determines that his order should be effective im- 
mediately. In all others the filing of an appeal v^^ith the Board 
stays the eflfective date of the Administrator's order. The Ad- 
ministrator may also determine that an emergency exists after 
an appeal has been filed. In such a case, the statutory stay is 
superseded by the Administrator's determination. Under Section 
609, the Board must dispose of an emergency appeal within sixty 
days after it is advised by the Administrator that an emergency 
exists. 

That Congress, in passing Section 609, foresaw only one formal 
hearing in a certificate action case is hardly open to debate. 
This is to say there is significance in the fact that the section 
characterizes the requisite Board procedure as a "hearing" and 
the FAA procedure as only "an opportunity to be heard as to 
why," etc. The House committee report described Section 609 
procedure as follows : 

When the Administrator revokes, modifies, or suspends a certificate 
under section 609, an appeal to the Board is provided. 

In order to expedite the safety enforcement process, section 609 of the 
legislation changes the present law by permitting the Administrator to 
amend, modify, suspend, or revoke safety certificates prior to formal pro- 



"14 U.S.C. 1429 (1964). 



REC. 13. FAA SAFETY HEARINGS 279 

ceedings before the Civil Aeronautics Board. However, in order to pro- 
tect the holder.s of certificates from arbitrary action, the Administrator 
is required, except in cases of emergency, before taking any action to ad- 
vise the holder of the certificate of the nature of the charges against him 
and to give the holder an opportunity to present informally his defenses 
to the Administrator. If, after this informal presentation, the Adminis- 
trator is still of the opinion that the certificate should be amended, modi- 
fied, suspended, or revoked, the Administrator may take such action. 
Thereafter, if the holder of the certificate disagrees with the action of 
the Administrator, he may appeal to the Civil Aeronautics Board where 
he will be given a full hearing complying in all respects with the require- 
ments of the Administrative Procedure Act. In this hearing before the 
Board, the Administrator will have the normal burden of proof to estab- 
lish facts, justifying the amendment, modification, suspension or revoca- 
tion of the certificate." 

To summarize the two salient points in this passage, the FAA 
procedure was seen as an informal conference, while the Board 
procedure was to be a formal adjudicatory hearing. 

From 1958, when the FAA was created, until 1962, the pro- 
cedure in certificate action cases conformed to the expectations 
of the framers of Section 609. The Administrator offered only 
an informal conference to the recipient of a Notice of Proposed 
Certificate Action/^ 



IV. "Project Tightrope" and the Introduction of the 

FAA Trial 

The present two-trial system dates from 1962, when the FAA 
trial was introduced through an exercise of the Administrator's 
rulemaking authority. This action was taken, quite clearly, to 
implement the recommendation of an independent advisory group 
which is usually referred to by its code name, "Project Tight- 
rope." 

Project Tightrope was set in motion by Najeeb Halaby shortly 
after he became Administrator in 1961. Administrator Halaby 
appointed a panel of six prominent lawyers and commissioned 
them to study possible improvements in the Agency's rulemaking 
and enforcement procedures. This was done against a background 
of sometimes recriminatory relations between Mr. Halaby's pred- 
ecessor and the FAA's "public." The prior Administrator had 
also made the enforcement process particularly visible to the 



"House Report No. 2360, 85th Congress, 2nd Session (1958), p. 8. The Senate report con- 
tains similar language. See S. Rep. No. 1811, 85th Cong., 2nd Sess. (1958), p. 11. 

"Report on Rulemaking and Enforcement Procedures: Project Tightrope (October, 1961), 
p. 12. A copy of this report is available in the library of the FAA. 



280 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

aviation public by maintaining an "enforcement crackdown" be- 
tween March 1959 and November 1960.^" 

Project Tightrope submitted its final report to Administrator 
Halaby in October 1961.^" In addition to a number of recom- 
mendations concerning rulemaking and investigative procedures 
which are not pertinent to the present discussion, the report 
contained what amounts to a condemnation of the enforcement 
scheme authorized by Section 609. The power to punish sum- 
marily, with justification to be made — if at all — at a subsequent 
trial, reminded the panel of the Queen of Hearts' edict: "Sen- 
tence first — verdict afterwards." It was, they said, simply "too 
much power for the Administrator to want or to wield." In sup- 
port of this conclusion the report offers the following concisely 
stated arguments : 

The present right of a disciplined airman to secure a de novo review 
from the CAB is, in our judgment, not equal to nor a proper substitute 
for a trial type hearing in advance of punishment. It puts the burden of 
moving forward on the wrong person. Anyone familiar with the problem 
of a citizen confronted by his Federal Government will appreciate that 
the whereabouts of the burden of moving forward is not an idle philo- 
sophical inquiry. 

Furthermore we are convinced — without being able to supply proof — 
that enforcement officials who know, as FAA officials know, that in only 
about 10 percent of their certificate cases will they have to present for- 
mal proof, and that the painstaking accumulation of relevant, reliable, 
probative and admissible evidence need be begun only when the accused 
appeals to the CAB, cannot have the same attitude, and the same scrupu- 
lous care in accumulating all the facts, which we always hope to find in 
those prosecutors who must be prepared to prove every charge before an 
independent tribunal. 

Finally, apart from its effect on substantive justice in particular cases, 
we believe that a procedure open to characterization as "punishment 
first, trial later" destroys the appearance of fairness that is so vital to 
public acceptance of any governmental regulation and enforcement 
system. 

As a substitute for summary punishment, Project Tightrope 
recommended that the Administrator establish a corps of in- 
dependent hearing examiners to hear and decide certificate action 
cases. The Administrator's Section 609 powers, with the excep- 
tion of his emergency suspension power, were to be delegated to 
the presiding examiner "subject to [the Administrator's] per- 
sonal review in cases where a severe punishment — such as rev- 
ocation of a certificate — has been imposed." Cases were to be 
initiated, as in the past, by the Administrator's Notice of Pro- 



" Report, Project Tightrope, supra note 15, p. 13. 

'^Report, Project Tightrope, supra note 15. See, in particular, pp. 18-21. 



REC. 13. FAA SAFETY HEARINGS 281 

I)Osed Certificate Action, except that the Tightrope-desip:ned 
notice would advise the respondent of his right to an FAA trial. 
A failure to accept the "proffered hearing" within a specified 
period would operate as a default and the Administrator would 
then take the proposed action. 

The Tightrope report acknowledged and dismissed two objec- 
tions to this proposal: (1) that the 1958 act did not provide 
for formal hearings before the FAA; and (2) that some cases 
might be tried twice, since "those who demand a separate evi- 
dentiary hearing before the CAB may be legally entitled to it 
under the present statute." As to the first point, the group as- 
sured the Administrator that "since the provision of a hearing 
within the FAA increases rather than decreases the rights of 
the accused and appears to be well within the powers of the 
Administrator, it could hardly be subject to legal attack." 

With regard to the second anticipated objection, the group 
indicated its disapproval of a two-trial system and suggested 
that it would be desirable to convert the Board trial into an 
appellate-type proceeding. In fact, the report recommended an 
amendment to Section 609 which would give the Board "dis- 
cretionary power to decide whether the taking of more evidence 
is required." The recommendation was stated rather weakly, 
however, since the group was unwilling to say that the same 
result could not be achieved under the existing statute by unilat- 
eral action of the Board. Also tending to weaken the recom- 
mendation was an expressed willingness to accept a two-trial 
system, if necessary, as the price of an urgently needed reform. 
The group thought it probable that the twice-tried case would be 
an "infrequent" phenomenon in any event. 

Early in 1962 the FAA implemented the essential features 
of the Tightrope recommendation. Apparently, however, the 
Agency never proposed an amendment to Section 609 along the 
lines suggested in the report. 

V. Eliminating the Two-Trial Problem 

The best way to eliminate the two-trial problem in the certifi- 
cate action process is to eliminate the FAA trial. The Ad- 
ministrator could do so simply by amending the agency's rules 
of procedure. There would be no need to seek enabling legislation, 
for Section 609 does not require the Administrator to provide 
anything more elaborate than an informal conference. On the 
other hand, it would be necessary to amend Section 609 in order 
to solve the two-trial problem by making Board procedure basic- 



282 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

ally appellate in character. The language of that Section, supple- 
mented by unambiguous statements in the pertinent Congres- 
sional committee reports, leaves little room to doubt that the 
NTSB hearing must be a trial. 

Of course, mere ease of implementation would be a poor sub- 
stitute for a sound result. But eliminating the FAA trial has, 
in addition, an important substantive advantage over changing 
the present Board procedure. The NTSB has an attractive degree 
of independence from the FAA even though both agencies are 
administrative units of the Department of Transportation. This 
fact should enure to the benefit of the Board's examiners pre- 
siding in certificate action cases, adding strength to their claim 
of neutrality as between certificate holders and the FAA staff. 
Moreover, because Board examiners are already experienced in 
certificate action cases this neutrality does not have to be bought 
at the price of competence. 

"Punishment first, trial later" need not be the result of doing 
away with the FAA trial. Under Section 609 the filing of an 
appeal with the NTSB (which may be accomplished by a simple 
letter under Board rules) ^^ stays the FAA certificate action order 
during the pendency of the appeal. Thus, actual punishment is 
possible only in the period between the entry of the Adminis- 
trator's order and the filing of the certificate holder's appeal. 
But even this gap can be avoided by postponing the effective 
date of the Administrator's order for a period of time sufficient 
to permit the appeal to be filed. In fact, the FAA does provide 
for such a postponement as a matter of standard procedure. If 
this practice were to be continued after the elimination of the 
FAA trial, it would be quite inaccurate to characterize the certifi- 
cate action process as "punishment first, trial later." 

However, the report of Project Tightrope correctly pointed 
out that appearance of fairness is important in winning public 
acceptance of an enforcement system. It is therefore undesirable, 
as the report again makes clear, for such a system to be open 
to characterization as "punishment first, trial later." It would 
seem, though, that the appearance of fairness problem would 
be slight in this particular instance if the Agency properly in- 
forms its regulated public. It is a question of telling respondents, 
and also certificate holders in general, how the system actually 
works. 

A final matter of interest is the apparent expectation of the 
Tightrope group that the implementation of its recommendations 



14 C.F.R. § 421.21(a). 



REC. 13. FAA SAFETY HEARINGS 283 

would encourage many more certificate holders to insist on for- 
mal hearings. This is certainly implicit in the group's argument, 
quoted supra, to the effect that the enforcement officials of that 
time lacked a strong incentive to investigate thoroughly, knowing, 
as they did, that they would be put to proof in only 10% of their 
cases. If the group did in fact expect to see a marked change in 
the ratio of hearing to nonhearing cases, the expectation has 
not materialized.'-' Discontinuing the FAA trial should not, there- 
fore, have any great effect on that ratio either. 



"For example, in fiscal year 1966 the FAA entered 1.471 certificate action orders, 82 of 
which were entered after an FAA hearing. (1966 FAA Annual Report, p. 16). An additional 
118 cases were appealed directly to the Civil Aeronautics Board. (Figure supplied informally by 
FAA). Even assuming that all appealed cases were subse<iuently tried, the Agency was put to 
proof in only 14% of the 1,471 cases. 



RECOMMENDATION NO. 14 

COMPILATION OF STATISTICS ON ADMINISTRATIVE 
PROCEEDINGS BY FEDERAL DEPARTMENTS AND 
AGENCIES 

Government agencies which conduct formal or informal rule- 
making proceedings or cases of adjudication which directly fix 
the rights and obligations of private persons (hereafter referred 
to as "proceedings")^ owe a special duty to the individuals 
affected and to the general public to manage their caseloads as 
efficiently as possible, to eliminate inordinate delays in the con- 
duct of proceedings, and to work continuously toward improv- 
ing the fairness, effectiveness, and economy of their procedures. 
The present volume of Federal administrative proceedings is so 
great that much of the basic information needed in these efforts 
can be developed in intelligible and useful form only through 
statistical study. The compilation and publication of comprehen- 
sive statistics on Federal agency proceedings, at regular intervals 
would : 

— Provide each agency with information concerning its 
business which would enable it to manage its caseload 
more effectively, 
— Augment generally the information concerning its activi- 
ties which each agency must furnish to the President, 
the Congress, and the public, 
— Afford affected parties and their counsel a better under- 
standing of the administrative processes which determine 
their rights and obligations, and 
— Provide a basis for specific study of particular agency pro- 
cedures by the agency itself, by committees of Congress, 
the Administrative Conference of the United States, the 
organized bar, research scholars, and other individuals 
and organizations, public and private, interested in im- 
proving the Federal administrative process. 

RECOMMENDATION 

1. To the extent deemed useful to advance the purposes of this 
recommendation, each Federal administrative agency which con- 



^ The agency compilations proposed by this recommendation should not be limited to formal 
proceedings, or limited to "proceedings" as that term has been employed in gathering statistics 
for past conferences or Congressional groups. Rather, agency figures should report all matters 
directly fixing the rights, privileges, and obligations of private interests including the routine 
handling of applications and claims. 

284 



REC. 11. COMPILATION OF STATISTICS 285 

ducts proceedings (as defined above) affecting private persons' 
I'ights, privileges or obligations, should prepare annual statistical 
data i)ertaining to those proceedings, to be compiled in such 
manner and presented in such publications as the agency con- 
siders appropriate. 

2. These statistical compilations should list the kinds of pro- 
ceedings pending during the year, with a concise yet meaningful 
description of the nature and purpose of each kind of proceeding 
and citations for the statutory authority under which the pro- 
ceedings are conducted, and the sections of the Code of Federal 
Regulations which set forth the rules of practice governing each 
kind of proceeding. 

3. For the purpose of agency efforts that may be made in co- 
operation with the Chairman of the Administrative Conference 
of the United States, to lessen delays in administrative pro- 
ceedings, the statistical compilation should show the number of 
days which elapsed during each significant step of the proceed- 
ings which were concluded during the year. 

4. In designing each agency's compilation, the following in- 
formation, together with the time-study data referred to in 3 
above, should be considered minimal : 

(a) The number of proceedings of each kind pending at 
the beginning of the year ; 

(b) The number of new proceedings filed or otherwise 
commenced during the year ; 

(c) The number of proceedings concluded during the year 
and the manner of their disposition (i.e., by settlement, 
dismissal on procedural grounds, decision on the merits 
without hearing, final decision by agency after hearing, and 
an examiner's initial decision, etc.) ; 

(d) The number of proceedings remaining at the end of 
the year ; and 

(e) The number of proceedings concluded during the year 
which were appealed to the courts. 

5. Each agency should periodically analyse all of the informa- 
tion thus compiled and should develop improved techniques fitted 
to its particular needs to reduce delays and expense and other- 
wise to improve its administrative processes. A copy of this 
analysis should be submitted to the Administrative Conference 
of the United States. 

6. In presenting its statistical compilation, each agency should 
summarize this analysis and describe the specific steps it has 
taken toward the ends referred to in 5 above. 



286 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

7. Each agency, in its subsequent compilations, should follow 
a pattern that makes possible a comparison of data with cor- 
responding data for earlier periods, thus reflecting changes in 
backlogs, volumes, and elapsed times and providing a measure of 
the agency's experience following the specific actions referred to 
in 6 above. 



REPORT OF THE COMMITTEE ON LICENSES AND 
AUTHORIZATIONS IN SUPPORT OF RECOMMENDATION 
NO. 14 

Prepared by 
The Staff of the Office of the Chairman 



Statistics assembled by the Office of the Chairman of the 
Administrative Conference report that 527,436 formal adminis- 
trative proceedings v^ere pending before 34 departments and 
independent agencies of the Federal Government during the six- 
year period from July 1, 1960 to July 1, 1966. All of these cases 
were of kinds which normally involve oral hearings and de- 
cision on the basis of the hearing record.^ 

In numbers, these formal proceedings represent only a small 
part of the Federal administrative process. Presumably the 
volume of proceedings which are not decided on the basis of 
a hearing record far exceeds the number of formal cases. For 
example, the above total does not include approximately 75,000 
U.S. Board of Parole cases during this period in which oral 
hearings were held, but the hearing provided only a part of the 
basis for decision. Similarly the total figure does not include 
the substantial number of cases which ordinarily are determined 
on written submissions without oral hearings, such as the ap- 
proximately 1,800 proceedings conducted each year by the Trade- 
mark Trial and Appeal Board. 

For purposes of the Administrative Conference statistics, the 
term "proceeding" was limited to disputed matters. The great 
bulk of the administrative process consists of the routine han- 
dling of large numbers of applications, claims, complaints, etc. 
which only rarely become the subject of "proceedings" in the 
sense that the agency's process for their disposition involves the 
receipt of opposing evidence and argument on disputed issues 
of law or fact. The Conference statistics therefore exclude, for 
example, the Federal Communications Commission's normal proc- 



* The Administrative Conference compilation notes the omission of a few cases of kinds for 
which figures are not available or which are instituted so infrequently that they are of no 
interest to the work of the Conference. Of the total number of proceedinKS, 28,897 still were 
pending at the end of the six-year period. A list of the reporting departments and independent 
agencies is attached as Appendix A. 

287 



288 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

essing of radio station applications in the non-broadcast and 
non-common carrier field, such as applications for public safety, 
industrial, amateur, land transportation, aviation, and marine 
radio services (514,039 applications processed in 1967 and 
523,550 in 1968).- 

The formal proceedings which are included in the figures as- 
sembled by the Administrative Conference are of great variety, 
ranging from social security hearings of consequence to a single 
pensioner to complicated rate cases of substantial impact upon 
entire industries and broad segments of the consuming public. 
Because of this variety, the 527,436 figures itself is of no signifi- 
cance. However it does serve to illustrate that the Federal ad- 
ministrative process is a governmental activity of considerable 
proportions. 

The Administrative Conference Committee on Licenses and 
Authorizations respectfully submits that, because of the magni- 
tude of the Federal administrative process, much of the informa- 
tion which is indispensable to an adequate understanding of that 
process can be developed and presented intelligibly and usefully 
only through statistical study. To manage its business effectively, 
an agency must have the means of understanding its operations. 
If changes in agency organization and procedure are to be made 
with confidence that they will produce greater fairness and 
effectiveness in future operations, they must be developed with 
a full understanding of past and present agency experience. In 
many areas of Federal agency activity only statistical study can 
assure such understanding. Without reliable data, efforts toward 
procedural reform in such areas may be only uncertain probes 
into a bottomless morass of imperfectly understood or misunder- 
stood experience. 

In particular, the problem of inordinate delays in the ad- 
ministrative process demands statistical study. Through the years 
of developing concern over the shortcomings of the administra- 
tive process as an important element of our system of govern- 
ment, critical attention has focused constantly upon this problem. 
One of the reasons for the extensive reliance of our system 
upon administrative agency processes has been the assumption 
that a specialized and highly expert administrative tribunal can 
appropriately dispose of a large volume of particular kinds of 
cases much more swiftly and economically than the courts. Al- 
though many agencies have labored commendably over the years 



FCC Annual Reports for 1967 and 1968. 



REC. 11. COMPILATION OF STATISTICS 289 

to realize this objective, the problem of delay apparently remains 
today as one of major proportions, 

A random sample of 5,000 cases reported in the Administrative 
Conference compilation as having traversed the full route through 
hearing, preliminary decision, exceptions, and agency final de- 
cision indicates that the total elapsed time from the date the 
matter was committed to the formal hearing process to the date 
of the final decision was in excess of 1,000 days in 730 cases, 
more than 5 years in 135 cases, and over 10 years in 38 cases. 
One proceeding lasted almost 20 years. 

The average elapsed time for the 5,000 proceedings was 465 
days, or 1 year and 100 days. These "total" times do not include 
whatever period the application, complaint, or claim, was under 
preliminary investigation, was on the agency's "processing line," 
was the subject of negotiations looking toward settlement, or 
simply was waiting in line, prior to its being committed to formal 
hearing procedures by designation for hearing or otherwise. 

Obviously an administrative remedy which takes more time 
than the private party involved has to spend is no remedy at 
all. Because governmental activity now plays such a prominent 
role in business afl^airs, inordinate delays in public administra- 
tion can constitute a serious encumbrance upon private business 
activity and private initiative and may, in its cumulative effect, 
slow the nation's economic development. For the individual to 
whom a particular agency action may be the difference between 
self-employment and a dead-end job, professional medical care or 
self-treatment, an education or an unskilled job, hospitalization 
or permanent disability, or self-sufficiency as a pensioner or 
dependence upon relatives, delays may work insufferable hard- 
ships. 

According to the statistics of the Office of the Chairman of 
the Administrative Conference, the total volume of formal pro- 
ceedings increased steadily over the six-year period of that com- 
pilation. Agency annual reports indicate that informal procedures 
increased at an even greater rate. Today there would appear to 
be no reason to expect that such growth will not continue. 

The Committee is of the view that time has run out for casual 
efforts to combat inordinate delays in agency proceedings. The 
Committee believes that an intensive and concerted attack upon 
this persistent problem is long overdue. 

Further, the Committee is convinced that the necessary first 
step, if the effort is to be effective in substantially reducing 
delays, is the compilation of comprehensive information on each 



290 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

agency's backlog of cases, its current volume of new proceedings 
instituted, the method of their handling and the manner of their 
disposition, and the significant details as to the time involved 
in their handling. 

In concluding that there is a substantial need for statistical 
study of administrative proceedings, the Committee is not un- 
aware of the limitations of statistical study, particularly where, 
as in the case of administrative proceedings, no two of the things 
being counted are exactly the same. As Kent Professor at Co- 
lumbia in 1922, Harlan Fiske Stone, in a speech relating to 
judicial statistics, appropriately noted: 

"The statistical method of dealing- with social problems often cannot be 
relied upon as a mathematical demonstration leading to specific conclu- 
sions, but it may be used to indicate tendencies, to mark out the bound- 
aries of a problem, and to point the directions to be g-iven to a particular 
investigation of a nonstatistical character." 

The Committee fully appreciates the fact that statistics are 
seldom an end in themselves. However, carefully tailored to the 
purposes they are intended to serve, they can be an indispensable 
tool for effective management of agency caseloads and an in- 
valuable device in the location of procedural problems and their 
causes. 

In part because of the limitations of statistical study, but 
perhaps more because of the dissimilarity of statistical techniques 
to the traditional methods of legal research, statistics have not 
enjoyed extensive use by study groups in the area of administra- 
tive reform. In 1939 the Attorney General's Committee on Ad- 
ministrative Procedure collected some data on the volumes of 
administrative proceedings and the time periods involved in their 
disposition. The statistical undertakings of the Hoover Commis- 
sions were somewhat more ambitious. The first continuing com- 
pilation was initiated by the Office of Administrative Procedure 
in the Department of Justice in 1957. That series at the outset 
was limited to formal proceedings conducted by examiners ap- 
pointed pursuant to section 11 of the Administrative Procedure 
Act and was patterned in some respect after the statistics of 
the Administrative Office of the United States Courts. 

The temporary Administrative Conference of 1961 and 1962 
compiled data for those two years, expanding somewhat the 
Office of Administrative Procedure series and utilizing computer 
processing. When that effort ended, the Senate Judiciary Sub- 
committee on Administrative Practice and Procedure, in coopera- 
tion with the Office of Administrative Procedure, continued the 



REC. 11. COMPILATION OF STATISTICS 291 

series for one more year, 1963, and later collected and held for 
processing the raw data for the years 1964-1966, in anticipation 
of the establishment of the statutory Administrative Conference. 
The Office of the Chairman has had these figures computer- 
processed and, combining them with the 1961-1963 figures, now 
has completed a six-year compilation. Although budget limitations 
have precluded printing this compilation, it is undergoing careful 
study by the Conference staflf and is available for the use of the 
committees of the Conference and others who may find it 
helpful. 

Past efforts to provide comprehensive statistical data have 
been invaluable to the work of the Office of Administrative 
Procedure and to the 1961-62 Administrative Conference in 
providing needed information of which no other research tech- 
nique is capable. However, for two principal reasons, the prod- 
ucts of these efforts have never realized their full potential. 
First, the considerable variety of agency functions and the result- 
ant variety of procedures among the agencies severely limits 
the utility of any design or format for a statistical compilation 
which seeks to measure the same factors in all proceedings 
across-the-board. For example, the Committee discussed one kind 
of procedure in one of the major regulatory agencies in which 
the really costly delays occur before the matter becomes a "pro- 
ceeding," as that term was used in compiling the Administrative 
Conference figures. This procedure was contrasted with others 
in other major regulatory agencies in which an applicant often 
files for operating authority with no intention of prosecuting 
his application, but rather only to assure his place as a party 
in a comparative proceeding in the event competitors seriously 
prosecute applications for the same authority. There simply is 
no way of providing comparable time-study data on these two 
kinds of proceedings by any single, across-the-board compilation 
design. There are many other examples of this kind of problem. 

The Committee concludes therefore that, i n order to go beyon d 
t he utility of the present Administrative Conference statistical 
compilation, the statistical studies for each agency must be 
tailored carefully to fit the particular procedures of the individual 
agency, rather than conformed to any across-the-board pattern . 

The second principal limitation upon the utility of past sta- 
tistical efforts results from the fact that the design of the com- 
pilation in each case has followed, rather than preceded, the 
experience which the compilation reported. A thoughtful decision 
by each agency before the year for which figures are to be 



292 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

compiled begins, so that arrangements can be made in advance 
for the recording of the desired information, obviously will pro- 
vide much more useful data than can be recovered after the 
year has ended. 

The Committee therefore recommends that each agency de- 
termine precisely v^hat information it needs to deal effectively 
with problems of inordinate delays and expense, etc. in its own 
administrative processes, and make whatever recording or re- 
porting arrangements are necessary before the beginning of the 
next fiscal year, so that comprehensive information concerning 
that year's experience may be assured. 

The Committee believes that every agency should compile and 
make available basic data reflecting the nature and proportions 
of the agency's caseload generally. The various factors measured 
by the Administrative Conference statistics may provide a pat- 
tern for the agencies in designing these basic statistics. The 
Administrative Conference compilation consists of three parts, 
the first of which provides a general "catalog" of formal pro- 
ceedings. It is the Committee's idea that the agency compilations 
proposed by this recommendation should not be limited to formal 
proceedings, or indeed to proceedings, as that term was employed 
in assembling the Conference data. Rather, agency figures should 
report all matters directly fixing the rights, privileges, and ob- 
ligations of private interests, including the routine handling of 
applications and claims such as those of the Federal Communica- 
tions Commission. 

Part I of the Administrative Conference compilation, the list- 
ing of formal proceedings, describes briefly the nature and pur- 
pose of each different kind of proceeding conducted by each 
department or independent agency, usually indicating how and 
by whom the proceeding is instituted and what kind of relief or 
sanction is contemplated, with citations for the agency's au- 
thority and its rules of practice governing the particular kind of 
proceeding. Part I also provides a general classification of pro- 
ceedings into a dozen broad categories and indicates as to each 
kind of proceeding whether it is subject to the requirements of 
sections 556 and 557 of title 5 of the United States Code, formerly 
sections 7 and 8 of the Administrative Procedure Act. 

Part II reports, for each kind of proceeding, the case input 
and output during the year and indicates generally the manner 
in which cases were disposed of. Specifically, it consists of a 
13-column schedule under the following column headings : 
1. Cases pending at the beginning of the fiscal year 



REC. 14. COMPILATION OF STATISTICS 293 

2. Number of new cases commenced during the year 

3. Number of cases reopened during the year 

4. Total input of cases for the year 

5. Number of cases closed during the year by agency 
decision on the merits after hearing and preHminary decision 

6. Cases closed by agency decision on the merits after 
hearing without a preliminary decision 

7. Cases closed after hearing by preliminary decision 
which became final without review by the agency 

8. Cases closed by decision on the merits without an oral 
hearing 

9. Cases closed by withdrawal, consent, settlement or 
other agreement 

10. Cases dismissed without the consent of the parties, on 
procedural grounds 

11. Other final disposition (describe in footnote) 

12. Total output of cases for the entire year 

13. Balance remaining at the end of the fiscal year 
Obviously the various columns indicating the manner in which 

cases were concluded can be made much more meaningful in an 
individual agency's compilation by dividing the total output into 
categories which reflect the particular agency's experience in- 
stead of the experience of all agencies generally. This limitation 
of the Administrative Conference statistics is well illustrated by 
the inadequacy of the above-described column headings in re- 
lation to the many kinds of cases, for example, in which no pre- 
liminary decision is issued. 

Part III of the Administrative Conference statistics provides 
basic time-study data on random samples of the cases which 
involved oral hearings (the proceedings reported in columns 
5, 6, and 7 of Part II) and, for the years 1964-66, on random 
samples of the cases reported in column 8. 

In addition to basic backlog, volume, and time-study data of 
this general nature, each agency should include in its own com- 
pilation whatever data it feels may be useful for purposes of 
special statistical studies. For example, if an agency feels that 
the answer to its particular caseload problem may be greater 
use of settlement and compromise techniques, it should assemble 
and report whatever data may serve that purpose. It should study 
and decide in advance exactly what statistical information might 
be useful in developing procedures for settlement, then collect 
and report such information. For example, how many cases are 
settled, at what stage of the proceeding, and subject to what 



294 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

conditions? What is the incidence of those factors which the 
agency is able to identify as factors which limit the opportunity 
for settlement or otherwise militate against settlement, etc. 

Examination of recent annual reports of a number of de- 
partments and agencies indicates a considerable amount of volume 
data, both on proceedings and on the routine processing of un- 
disputed matters, is made available in such reports. Occasionally 
there is laso information int he nature of these special-purpose 
statistical studies such as the example above. However, there 
is virtually no information which would assist in meeting the 
problem of inordinate delays. Much more comprehensive statis- 
tics are needed to fulfill the objectives stated at the bottom of 
the first page of the recommendation. 

To repeat the same statistical information at regular intervals 
accomplishes much more than simply multiplying such informa- 
tion. The continuing accretion of data, in effect, adds a third 
dimension to the demonstration. It enables comparisons over a 
period of time which indicate the direction in which the re- 
ported experience is moving as well as the effect of procedural 
or other changes. An essential part of the Committee's recom- 
mendation, therefore, is that each agency should collect and 
publish its statistics as a continuing series. Obviously the pub- 
lication should be annual. In the opinion of the Committee, the 
department and agency annual reports provide an ideal oppor- 
tunity for such annual publication. 

The principal thrust of the recommendation of the Committee 
on Licenses and Authorizations is that statistical analysis of 
an agency's administrative procedures should, in the first in- 
stance, be a regular and important activity of the agency itself. 
The responsibility for fair, expeditious, and effective procedures 
is, in the first instance, in the agency. The immediacy of the 
agency's experience with its procedures affords it a special com- 
petence which makes its own analysis far more useful than study 
by outside experts. 

The role of the Administrative Conference under its statutory 
responsibility for the collection of statistics and information 
concerning agency procedures should be as a central exchange 
or "clearing-house" for specific ideas for improvements in pro- 
cedures developed from the individual agencies' analyses and as 
a forum for both comprehensive and particularized study of the 
experience of the several departments and agencies. But the 
collection and publication of fundamental statistical information, 



REC. 1 J. COMPILATION OF STATISTICS 295 

carefully fashioned to the particular agency function, should be 
the duty of the individual agency in the first instance. 

The Committee is convinced that detailed study by each agency 
of its own experience can provide insights into procedural prob- 
lems which no amount of examination by an extrinsic body, 
however expert, can provide. By the same token, the universal 
experience represented by the Conference membership can pro- 
vide a comprehensive understanding of administrative procedures 
beyond the competence of any individual agency. The many 
serious problems of the Federal administrative process demand 
the best efforts of the agencies and of the Conference. 

In the past, statistical study has been laborious. Today, every 
agency has its own computer facilities or, at nominal expense, 
can arrange for the use of the facilities of some other agency. 
The Committee is confident that, with such capability, continuing 
statistical study of administrative procedures by the agencies 
themselves, with the help of the Administrative Conference, will 
eliminate the general uncertainty which attends so many of our 
present procedural problems and will contribute substantially in 
ultimately eliminating excessive delays and improving the fair- 
ness and effectiveness of agency procedures. 



APPENDIX A 

DEPARTMENTS AND AGENCIES WHOSE PROCEEDINGS ARE INCLUDED IN THE 
1960-1966 STATISTICAL COMPILATION OF THE OFFICE OF THE CHAIRMAN OF THE 
ADMINISTRATIVE CONFERENCE 

1. Department of Agriculture 

2. Atomic Energy Commission 

3. Civil Aeronautics Board 

4. Civil Service Commission 

5. Department of Commerce 

6. Department of Defense 

7. Federal Aviation Agency 

8. Federal Coal Mine Safety Board of Review 

9. Federal Communications Commission 

10. Federal Deposit Insurance Corporation 

11. Federal Home Loan Bank Board 

12. Federal Maritime Commission 

13. Federal Power Commission 

14. Federal Reserve System Board of Governors 

15. Federal Trade Commission 

16. General Services Administration 

17. Department of Health, Education and Welfare 

18. Department of the Interior 

19. Interstate Commerce Commission 



296 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

20. Department of Justice 

21. Department of Labor 

22. National Aeronautics and Space Administration 

23. National Labor Relations Board 

24. National Mediation Board 

25. National Science Foundation 

26. Post Office Department 

27. Railroad Retirement Board 

28. Securities and Exchange Commission 

29. Small Business Administration 

30. Department of State 

31. Subversive Activities Control Board 

32. Tennessee Valley Authority 

33. Department of the Treasury 

34. Veterans' Administration 



RECOMMENDATION NO. 15 

CONSIDERATION OF ALTERNATIVES IN LICENSING 

PROCEDURES 

Court decisions, notably Scenic Hudson Preservation Confer- 
ence V. FPC,^ have emphasized that in licensing cases the Federal 
Power Commission must explore and give proper consideration 
to possible alternatives to the specific plan proposed by the ap- 
plicant. This principle may in the future be applied to other 
licensing agencies. Since the range of possible alternatives in 
any case can be extensive and in some cases virtually unbounded, 
ways must be sought to control the scope and duration of licens- 
ing proceedings within manageable limits while meeting the 
requirements of the law. 

RECOMMENDATION 

Each agency which issues licenses, permits, or other forms of 
authorization, should seek to create procedures fitting its partic- 
ular circumstances which will assure appropriate consideration 
of alternatives where necessary, and at the same time will permit 
efi'ective administration of that agency's licensing functions. 

Because the various agencies must deal in their licensing pro- 
cedures with many diverse subject matters, the Administrative 
Conference cannot specify a single rule and procedure for achiev- 
ing this objective. Procedural techniques which experience has 
shown useful in analogous situations and which an agency 
might consider include: (1) Guidelines embodying a rule of 
reason concerning the number and character of alternatives to 
be considered in particular types of cases; (2) rules providing 
a point in time beyond which the issues in a proceeding will not 
be expanded to include additional alternatives except under com- 
pelling circumstances; (3) techniques, such as prehearing con- 
ferences and the filing of testimony in written form before trial, 
which tend to promote early identification of interested parties 
and important alternatives; and (4) placing responsibility upon 
the party or other person proposing an alternative to the ap- 
plicant's proposal to make an appropriate threshold showing that 
the alternative deserves the agency's consideration. 



'354 F.2d 608 (2d Cir. 1965) cert, denied. 384 U.S. 941 (1966). See also Udall v. FPC, 387 
U.S. 428 (1967). 



297 



REPORT OF THE COMMITTEE ON LICENSES AND 
AUTHORIZATIONS IN SUPPORT OF RECOMMENDA- 
TION NO. 15 



1. Background 

Under a principle supported by a number of recent court 
decisions, the duty of an agency in a licensing case goes beyond 
the task of determining whether the applicant's proposal would 
result in a net gain to the public.^ These cases assert that the 
agency must, in addition, consider alternative courses of action 
which might serve the public interest better than the specific 
proposal of the applicant. Moreover, the agency will not neces- 
sarily fulfill this duty in a particular case if it merely considers 
whatever evidence regarding alternatives the private parties 
happen to bring forward. The agency has, rather, an independent 
and affirmative obligation to see that alternatives are adequately 
explored before a decision is rendered. 

Scenic Hudson Preservation Conference v. FPC - is the leading 
decision on this subject. In Scenic Hudson the Federal Power 
Commission had issued an order authorizing a power company 
to construct and operate a hydroelectric facility on the Hudson 
River. ^ During the course of the formal administrative proceed- 
ings which led to the issuance of this licensing order, the pro- 
posed project had been vigorously opposed by conservationist 
intervenors, who argued that the facility would desecrate an 
area of unique scenic beauty. The conservationists did not 
seriously question the company's need for an additional source 
of bulk power. Instead, they maintained that the public interest 
dictated that the company be forced to rely on a source other 
than the proposed project. The Commission found, however, that 
the company's proposal was superior to any of the suggested 
alternatives, including power which the company might be able 
to purchase from interconnected systems, as well as power which 
it might generate by alternative methods. 



^Scenic Hudson Preservation Conference v. FPC, 354 F.2d 608 (2d Cir.. 1965), Cert, denied, 
384 U.S. 941 (1966), Northern Natural Gas Co. v. FPC, 399 F.2d 953 (D.C. Cir. (1968); 
Marine Space Enclosures, Inc. v. FMC, No. 22,936 D.C. Cir., July 30, 1969. And see Citizens 
for Allegan County, Inc. v. FPC, No. 21,842, D.C. Cir., April 29, 1969 (dictum). 

2 354 F.2d 608 (2d Cir., 1965), cert, denied, 384 U.S. 941 (1966). 

3 See 16 U.S.C. 797(e) (1964). 

298 



REC. 15. LICENSING PROCEDURES 299 

On petition for review of the Commission's order, the Court 
of Appeals for the Second Circuit conchided that the FPC had 
"failed to make a thorough study of possible alternatives" to a 
plant which was to be located in what the court referred to as 
"an area of unique scenic beauty and major historical signifi- 
cance." The court found "no evidence in the record to indicate 
that . . . the Commission . . . ever seriously considered" power 
from interconnecting systems as an alternative. In addition, the 
court dismissed the evidence relating to gas turbines as a com- 
bination of "self-serving" statements on behalf of the applicant 
and "scanty," "hastily prepared" testimony offered by the 
intervenors. 

The court held, in effect, that the Commission cannot rely on 
the adversary process to bring all necessary facts to its attention. 

In this case, as in many others, the Commission has claimed to be the 
representative of the public interest. This role does not permit it to act 
as an umpire blandly calling balls and strikes for adversaries appearing 
before it; the right of the public must receive active and affirmative pro- 
tection at the hands of the Commission. 

. . . The Commission must see to it that the record is complete. The 
Commission has an affirmative duty to inquire into and consider all rele- 
vant facts.' 

It is made abundantly clear in other portions of the opinion 
that the term "relevant facts" includes at least some alternatives. 
The set of included alternatives is variously described by the 
court as those which are "possible," or "reasonable," or "feasible." 

Apparently because it viewed the FPC as having an affirmative 
duty to explore alternatives, the court held that the Commission 
erred in refusing to re-open the record to permit the taking of 
additional testimony regarding the gas turbine alternative. The 
testimony in question had been offered by a taxpayer and con- 
sumer group in support of its eleventh-hour petition to intervene. 
The FPC rejected the petition and the proffered testimony as 
untimely, since the filing was made after the Commission had 
heard oral argument in the case. But the Second Circuit brushed 
aside the question of timeliness, noting that the petition was 
filed more than two months before the Commission entered its 
order licensing the Hudson River project. 

It is possible to conclude from the opinion in Scenic Hudson 
that the aflfirmative duty to explore alternatives is a Federal 
Power Act specialty. Section 10(a) of that Act requires the 
Commission to find : 



* 354 F.2d at 620. 



300 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

That the project adopted . . . shall be such as in the judgment of the 
Commission will be best adapted to a comprehensive plan for improving 
or developing a vi^aterway or waterways for the use or benefit of inter- 
state or foreign commerce, for the improvement and utilization of 
water-power development, and for other beneficial public uses, including 
recreational purposes; and if necessary in order to secure such plan the 
Commission shall have authority to require modification of any project 
and of the plans and specifications of the project works before approval.^ 

The reference in Section 10(a) to a "comprehensive plan" 
clearly was regarded as significant by the court in Scenic Hudson. 
At one point in the opinion the court flatly states : 

The failure of the Commission to inform itself of these alternatives can- 
not be reconciled with its planning responsibility under the Federal Power 
Act.' 

And at another point the court cited Section 10(a) in support 
of the following statement : 

The Federal Power Commission argues that having intervened "petition- 
ers cannot impose an affirmative burden on the Commission." But, as we 
have pointed out. Congress gave the Federal Power Commission a spe- 
cific planning responsibility.' 

On the other hand, the court said that the Commission dis- 
regarded not only "the statute" but "judicial mandates" in fail- 
ing "to probe all feasible alternatives." The judicial mandates to 
which the court referred are City of Pittsburgh v. FPC "^ and 
Michigan Consolidated Gas Co. v. FPC.-* Both of these cases 
were decided, however, under the Natural Gas Act,^" a statute 
which lacks any language comparable to that of Section 10(a) 
of the Federal Power Act. Working with nothing more peculiar 
than the "public convenience or necessity" standard in Section 
7(b) of the Natural Gas Act, the court in City of Pittsburgh 
observed : 

The existence of a more desirable alternative is one of the factors which 
enters into a determination of whether a particular proposal would serve 
the public convenience and necessity. That the Commission has no au- 
thority to command the alternative does not mean that it cannot reject 
the proposal." 

Michigan Coyisolidated, which involved a Commission order au- 
thorizing the abandonment of natural gas service, arose under 



= 16 U.S.C. 803(a) (1964). 

«354 F.2d at 622. 

' Id. at 620. 

«237 F.2d 741 (D.C. Cir., 1956). 

'>283 F.2d 204 (D.C. Cir.), cert, denied, 364 U.S. 913 (1960). 

10 52 Stat. 821-833, as amended, 15 U.S.C. 717-717w (1964). 

" 237 F.2d at 751. 



REC. 15. LICENSING PROCEDURES 301 

the same section of the Natural Gas Act. In remanding that 
case to the Commission for consideration of a settlement proposal 
filed with the FPC by an intervening- party, the court stated: 

Even assuming- that under the Commission's rules [the applicant's] rejec- 
tion of the settlement rendered the proposal ineffective as a settlement, it 
could not, and we believe should not, have precluded the Commission 
from considering the proposal on its merits. Indeed, the proposal appears 
prima facie to have merit enough to have required the Commission at 
some stag-p in the proceeding to consider it on its own initiative as an 
alternative to total abandonment.'" (Emphasis in original.) 

City of Pittsburgh and Michigan Consolidated therefore 
anticipated much of what was later said in Scenic Hudson. For 
this reason, agencies which issue licenses under a "public in- 
terest" standard, or a simple variant thereof, would be well- 
advised to view Section 10(a) of the Federal Power Act as 
conducive, but not wholly indispensable, to the position taken 
in Scenic Hudson. Indeed, the broader interpretation of Scenic 
Hudson is supported by recent decisions of the Court of Appeals 
for the District of Columbia Circuit. That court has cited Scenic 
Hudson with approval in cases involving- the Shipping Act " and 
the Natural Gas Act.^ ' 

Additional applications of the Scenic Hudson doctrine may 
become apparent from time to time through the efforts of imagi- 
native practitioners. For example, common carrier merger pro- 
ceedings would seem to represent an area in which the impact 
of Scenic Hudsoyi is likely to be felt.^' However, in certain other 
areas, such as the licensing of nuclear reactors, the narrow focus 
of the applicable decisional criteria may preclude any extensive 
application of the doctrine.^" 

II. The Problems 

The possibility that Sceiiic Hudson will prove to have a wide- 
spread impact on the Federal administrative process suggests 
that all licensing agencies should be fully aware of the pro- 
cedural problems which seem to inhere in an affirmative under- 
taking to probe all feasible alternatives. 

First among these problems is, of course, the sheer number of 
alternatives which might have to be investigated. The implica- 



" 283 F.2d at 224. 

" Marine Space Enclosures, Inc. v. FMC, note 1 supra. 

^* Northern Natural Gas Co. v. FPC. 399 F.2d 953, 973 (1968). 

^^ E.g., railroad merger proceedings under 49 U.S.C. 5(2) (1964). 

'"Under 42 U.S.C. 2134(b), the responsibility of the Atomic Energy Commission in licensing 
nuclear reactors is "to promote the common defense and security and to protect the health 
and safety of the public." 



302 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

tions of delay and expense are obvious. The evaluation of just 
one alternative may be a formidable task requiring the participa- 
tion of engineers or economists and the performance of sophis- 
ticated tests or statistical studies. Then too, the testimony with 
respect to a single alternative could take up several full hearing 
days. 

What an attempt to probe "all feasible alternatives" might 
entail is indicated by the proceedings in the Scenic Hudsoyi case 
on remand before the FPC. By May, 1969, more than seventy 
days of hearings had been held, and evidence had been introduced 
on the following alternatives : 

— Alte7-native hj/droelectric sites. The Commission's staff 
made a study of thirty-five potential hydro sites; twenty- 
three were studied by the applicant. 
— Opportumties to purchase power at wholesale. The testi- 
mony covered four systems with which the applicant was 
then interconnected, plus two other conceivable intercon- 
nections. 
— Alternatives suggested by the applicant. After a computer 
study eliminated a number of alternatives as impractical, 
the applicant introduced evidence on the following: (1) 
2-1000 mw conventional steam units; (2) 2040 mw of 
gas turbine capacity; (3) 2000 mw of nuclear capacity; 
(4) 1000 mw of nuclear capacity plus 1088 mw of gas 
turbine capacity; (5) 8-250 mw fossil fuel peaking units; 
and (6) 1000 mw of nuclear capacity plus 4-250 mw fossil 
fuel peaking units. 
— Alternatives suggested by intervenors. The principal in- 
tervener in the case, a league of independent groups with 
an interest in conservation, made an extensive presenta- 
tion on a combination of 5-140 mw peak load gas turbines 
and a 1000 mw nuclear unit. Other witnesses sponsored 
by the same intervener gave testimony on (1) a 2000 mw 
nuclear alternative, (2) 1,800 mw of gas turbine capacity, 
and (3) 810 mw of gas turbine capacity plus a 1000 mw 
nuclear unit. 
— Exotic alternatives. Brief testimony was heard on such 
"exotic" sources of electrical energy as fuel cells and 
MHD (magnetohydrodynamic) generators. 
— Relocation of powerhouse. The major alternative of the 
Commission's staff was a proposal which would have 
shifted the applicant's powerhouse to a nearby site and 
put it entirely underground. Staff studies indicated that 



REC. 15. LICENSING PROCEDURES 303 

this alternative would reduce the adverse scenic conse- 
quences of the project while producing- an economic bonus 
for the applicant. 
— Alternate transmission line routes. In addition to a num- 
ber of different overhead transmission routes, cost evidence 
was introduced on five possible underground routes.*" 

The gas pipeline licensing function of the FPC provides 
another illustration of how a single case can involve numerous 
alternatives. Consider, for example, this statement made by 
counsel for an intervening landowner in a 1968 case : 

We suggest, Mr. Examiner, that the route selected by the company is not 
the route that best serves the public convenience and necessity. We believe 
there are several alternative routes, even alternatives within the context 
of the proposal made by the company, modifications to it, which might be 
better adapted to serve the interests of not only [his client] but other 
landowners in the area and provide better protection for public safety." 

Clearly, the phrase "all feasible alternatives" is capable of de- 
fining an imposing number of issues. 

Some alternatives may not be suggested, indeed may not even 
become apparent, until a proceeding is well underway. Thus, un- 
less some meaningful requirement of timeliness can be imposed, 
the scope of a particular hearing could be not only very broad 
but ever-expanding. In addition, the number of parties may well 
grow as additional alternatives are introduced, since any alter- 
native may threaten interests which are not threatened by the 
applicant's proposal. 

III. Responding to the Challenge of Scenic Hudson 

The decision in Scenic Hudson merits careful consideration 
by all Federal agencies which issue licenses, permits, or other 
forms of authorization. Although the practical significance of 
the case may vary considerably from one licensing function to 
another, it would be a wise precaution in each instance to evalu- 
ate the challenge of the court's mandate. Where the exploration 
of alternatives could have a significant dilatory impact, some 
thought should be given to the establishment of principles and 
procedures which both recognize the alternative plan doctrine 
and provide assurance that it will not paralyze the particular 
licensing function. 



''These alternatives are discussed in a hearing examiner's initial decision dated August 6, 
1968 and a staff brief on exceptions dated October 7, 1968. FPC Docket No. P-2338. 
" Transcript of record, p. 93, Shenandoah Gas Co.. FPC Docket No. OP 68-196. 



304 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

An appropriate adjustment to Scenic Hudson would involve 
some degree of agency control over the number of alternatives 
to be considered, and the period during which alternatives may 
be suggested. The first task may be difficult. It will involve the 
development of guidelines specifying a reasonable range of alter- 
natives. This could be done either by rule or by order in individual 
cases. In either event, the exclusionary effect of the guidelines 
would have to be tempered by providing for an expansion of the 
issues where a party is able to make a suitable threshold showing 
on the merits of an additional alterantive. Establishing a time 
limit is, of course, not difficult and could likewise be accomplished 
either by rule or by order. 

Exclusionary rules or orders must, however, be accompanied 
by greater efforts to identify potentially fruitful alternatives. 
In this regard, the agency's staff should normally play the leading 
role. In addition, procedural techniques, such as pre-hearing con- 
ferences and the advance submission of direct testimony in 
written form, might be used successfully to expose the various 
logical alternatives to an applicant's proposal. 

Conscientiously designed procedures for the consideration of 
alternatives are likely to be respected by the courts. Even though 
Scenic Hudson does not specifically acknowledge a power on the 
part of the FPC to impose reasonable limits concerning the 
consideration of alternatives, it cannot be assumed that the 
court intended to preclude efficient administration of the Federal 
Power Act or any other statute. The answer must be that a 
"rule of reason" is compatible with the teachings of Sceinic 
Hudson.^^ 



"See Citizens for Allegan County, Inc. v. FPC, supra note 1, slip opinion at p. 13, where 
the court stated : 

. . . We agree that the FPC has an active and independent duty to suard the public in- 
terest, and that this may require consideration of alternative courses, other than those 
suggested by the applicant. This does not mean that the FPC must always undertake 
exhausting inquiries, probing for every possible alternative, if no viable alternatives have 
been suggested by the parties, or suggest themselves to the agency. 



RECOMMENDATION NO. 16 

ELIMINATION OF CERTAIN EXEMPTIONS FROM THE 
APA RULEMAKING REQUIREMENTS 

RECOMMENDATION 

In order to assure that Federal agencies will have the benefit 
of the information and opinion that can be supplied by persons 
whom regulations will affect, the Administrative Procedure Act 
requires that the public must have opportunity to participate in 
rulemaking proceedings. The procedures to assure this oppor- 
tunity are not required by law, however, when rules are pro- 
mulgated in relation to "public property, loans, grants, benefits, 
or contracts." These types of rules may nevertheless bear heavily 
upon nongovernmental interests. Exempting them from generally 
applicable procedural requirements is unwise. The present law 
should therefore be amended to discontinue the exemptions to 
strengthen procedures that will make for fair, informed exercise 
of rulemaking authority in these as in other areas. 

Removing these statutory exemptions would not diminish the 
power of the agencies to omit the prescribed rulemaking proce- 
dures whenever their observances were found to be impracticable, 
unnecessary, or contrary to the public interest. A finding to that 
effect can be made, and published in the Federal Register, as 
to an entire subject matter concerning which rules may be pro- 
mulated. Each finding of this type should be no broader than 
essential and should include a statement of underlying reasons 
rather than a merely conclusory recital. 

Wholly without statutory amendment, agencies already have 
the authority to utilize the generally applicable procedural meth- 
ods even when formulating rules of the exempt types now under 
discussion. They are urged to utilize their existing powers to 
employ the rulemaking procedures provided by the Administra- 
tive Procedure Act, whenever appropriate, without awaiting a 
legislative command to do so. 



305 



REPORT OF THE COMMITTEE ON RULEMAKING IN 
SUPPORT OF RECOMMENDATION NO. 16 

Prepared by 

Arthur E. Bonfield 

Professor of Laiv 

University of Iowa 



I. The Problem 

In 1941 the Attorney General's Committee on Administrative 
Procedure concluded that the rulemaking processes of federal 
agencies "should be adapted to giving adequate opportunity to 
all persons affected to present their views, the facts within 
their knowledge, and the dangers and benefits of alternative 
courses." ^ The Committee realized that the knowledge of an 
administrative agency is rarely complete, an administrative 
agency is not ordinarily a representative body, its deliberations 
are not usually carried on in public, and its members are not 
subject to direct political controls in the same way as are legis- 
lators. Consequently, public participation "in the rulemaking 
process is essential in order to permit administrative agencies 
to inform themselves and to afford adequate safeguards to private 
interests." - The message of the Attorney General's Committee 
is as sensible today as it was when first communicated. Very 
substantial reasons suggest that the interested public should have 
an adequate opportunity to contribute to the rulemaking process. 

The most obvious reason why such public participation is de- 
sirable is that it helps to elicit "the information, facts, and 
probabilities which are necessary to fair and intelligent action" ^ 
by those responsible for promulgating administrative rules. Since 
an agency's own accumulated knowledge and expertise are rarely 
sufficient to provide all the needed data upon which rulemaking 



* Final Report of the ArroRNETi' General's Committee on Administrative Procedure 102 
(1941) [hereinafter cited as Attorney General's Final Retort]. 

-Id. 103, quoted in S. Doc. No. 248. 79th Cong., 2d Sess. 19-20 (1946) [hereinafter cited as 
S. Doc. No. 248] (Justification for enacting § 4 of Administrative Procedure Act). S. Doc. 
No. 248 is the official legislative history of the APA and conveniently collects working papers 
and committee reports. 

' Attorney General's Final Report 102. 

306 



REC. Ifi. APA RULEMAKING EXEMPTIONS 307 

decisions should be based, agency communication with interested 
parties on the subject of proposed regulations is essential. Such 
parties are usually in the best position to provide much of the 
specific information necessary for wise rule formulation. An 
opportunity for interested persons to inform appropriate ad- 
ministrators of facts, views, or arguments that they consider 
relevant to any proposed rule is, therefore, necessary for the 
sound operation of government.' 

Other reasons also dictate our government's need to involve 
interested parties in the formulation of rules by affording them 
the opportunities just noted. Thirty years ago it was asserted 
that "our conception of administrative responsibility is under- 
going profound change. The emphasis is shifting; instead of 
[public] subserviency to arbitrary will [of administrators] we 
require [administrative] responsiveness to commonly felt needs 
and wants." ' When interested parties have a chance to communi- 
cate facts and opinions bearing on proposed regulations to the 
appropriate authorities, the latter are likely to become more 
responsive to the problems of those involved than would other- 
wise be the case. 

Public involvement in the formulation of rules is also an ex- 
cellent way to implement the ideal of participatory democracy. 
If we assure interested parties an opportunity to influence the 
decision-makers by communicating with them, public involvment 
in the rulemaking process will expand, making the process more 
representative. Public participation in rulemaking may be partic- 
ularly helpful when an agency promulgates an unpopular rule. 
Dissenters may be less likely to sabotage a rule in an active way 
if they have had an adequate opportunity to present their 
objections prior to its promulgation. Moreover, the failure of 
officials to secure views from the relevant public before regulations 
are issued may result in a lack of administrative preparation for 
certain problems that could arise from those rules' application, or 
the community's reaction to them. 

Parties affected by administrative rules have a distinct per- 
sonal interest in how they are made. An adequate opportunity 



■* Recognition of the value of such public participation in Bovernment policy formulation 
was reflected in the May, 1969. action of the President's Task Force on Oil Import Quota 
Controls. AlthouKh not re(iuire<i to do so, the Task Force decided to assure that all relevant 
information and opinion on the (luestion of oil import quota controls was before it by invitinK 
interested persons to "submit concise written comments to the task force on whether oil 
imports should remain subject to reduction and, if so, to what degree and by what means." 
34 Fed. Reg. 7264 (1969). The Attorney General's Committee on Administrative Procedure 
made a similar broad solicitation of views in 1940. Attorney Genotal's Final Report 4-5. 

' Friedrich, Public Policy and the Nature of Administrative Reaponsibility, in Public Ad- 
ministration AND Policy 241 (P. Woll ed. 1966). 



308 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

to present relevant information to appropriate officials is one of 
the most important tools with which individuals can defend 
themselves against an exercise of rulemaking power that may- 
be detrimental to their interests. Political realities may make 
legislative modification of unwise regulations hopeless; and the 
breadth of agency discretion may make judicial assaults un- 
successful. In cases of this sort, an opportunity for affected 
parties to communicate their views on proposed rules to the 
appropriate officials may be the only meaningful chance those 
parties will have to protect their interests against rules they 
consider unwise. 

It should be clear that the public participation in rulemaking 
under discussion here is only directed at assuring an adequate 
opportunity for interested persons to communicate their views, 
information, and the like, to the relevant government officials. 
There is no intention to transfer the actual decision-making 
power with respect to rules to the interested public. Meaningful 
public participation in the formulation of administrative rules 
does not "in any way affect the authority of the agency or its 
discretion. All that is required is the giving of ... an opportu- 
nity to interested persons to present their views concerning the 
proposed rule. The department or agency may give such con- 
sideration to the views presented as it deems warranted under 
the facts." « 

To be meaningful, the opportunity to communicate with re- 
spect to proposed rules need not necessarily require oral hearings ; 
indeed, written submissions will usually be adequate. Such an 
assurance of public participation in rulemaking does require, 
however, that the public be given timely notice of all proposed 
rulemaking and that an indication of the subject matter of the 
rulemaking in question be included. Otherwise, the public partici- 
pation which results will probably 

be diffuse and of little real value either to the participating' parties or to 
the agency .... Hence, sound practice dictates that ordinary [notice of 
such rulemaking and opportunities to participate] be accompanied by 
tentative drafts of the regulations being considered or by a precise state- 
ment of the subjects which it is expected may ultimately be touched." 

In addition to general notice of proposed regulations, adequate 
public participation in the rulemaking process requires that the 
exact terms of a new rule be published a reasonable time before 



^ (Commission on Organization of the Executive Branch of the Governmejnt, Task 
Force Report on Legal Sermces and Procedure 160 (1955) [hereinafter cited as Task 
Force Report]. 

'Attorney General's Final Report 108 (emphasis added). 



REC. IG. APA RULEMAKING EXEMPTIONS 309 

its effective date. Otherwise, even if the public has participated 
in the preliminary formulation of a rule, the final details of its 
exact text may not be known to interested parties until the date 
of its promulgation as law. A procedure foi' delayed efl'ectiveness 
is, therefore, necessary "to correct error or oversight in regula- 
tions before, rather than after, they become effective." "^ Such a 
safeguard procedure will "afford persons affected a reasonable 
time to prepare for the effective date of a rule or rules or to 
take any other action which the issuance of the rules may 
prompt." •' 

Meaningful public participation in the rulemaking process 
would also seem to demand recognition of another adminis- 
trative obligation and private right. Interested parties should be 
able, on their own motion, to induce a reasoned consideration of 
the propriety of the issuance, amendment, or repeal of a rule, by 
those authorized to make and modify rules. Absent this ability 
of the concerned public, administrators satisfied with the status 
quo might neglect to reexamine their position in light of any new 
views or information that becomes available. A right to petition 
for the issuance, amendment, or repeal of a rule and to receive 
a reasoned response thereto is not only valuable as a protection 
for private interests, but is also necessary to assure sound gov- 
ernment. It forces agencies to reconsider their position with re- 
spect to existing or proposed rules in light of petitioners' objec- 
tions, therefore making it likely that wiser policies will be pursued 
with respect to those rules than would otherwise be the case. 

At some point, however, requirements of the sort discussed 
above may directly conflict with other values important to the 
operation of our polity. More specifically, there is an obvious 
need to conduct our government efficiently, expeditiously, effec- 
tively, and inexpensively. No rulemaking scheme may be consid- 
ered acceptable unless it fairly reconciles these latter values with 
the societal interest in maximizing public participation in 
the development of administrative regulations. Imposition of re- 
quirements on the rulemaking process that unduly fetter agency 
action, or frustrate its purposes, would obviously strike an in- 
adequate balance between the competing values involved. Yet 
the interest in involving interested parties in rulemaking is not 
so slight that it should be set aside solely on the basis of minor 
inconvenience or expense to government. 

Section 4 of the Federal Administrative Procedure Act 



" Attorney General's Final Report 114. 
" S. Doc. No. 248. at 201, 259. 



310 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

(APA), now 5 U.S.C. § 553, attempts to reconcile this conflict 
between the need for public participation in rulemaking and the 
need for efficient, expeditious, effective, and inexpensive govern- 
ment. That provision states : 

(a) This section applies, according to the provisions thereof, except to 
the extent that there is involved — 

(1) a military or foreign affairs function of the United States; or 

(2) a matter relating to agency management or personnel or to 
public property, loans, grants, benefits, or contracts. 

(b) General notice of proposed rule making shall be published in the 
Federal Register, unless persons subject thereto are named and either 
personally served or otherwise have actual notice thereof in accordance 
with law. The notice shall include — 

(1) a statement of the time, place, and nature of public rule mak- 
ing proceedings; 

(2) reference to the legal authority under which the rule is pro- 
posed; and 

(3) either the terms or substance of the proposed rule or a de- 
scription of the subjects and issues involved. 

Except when notice or hearing is required by statute, this subsection does 
not apply — 

(A) to interpretative rules, general statements of policy, or rules 
of agency organization, procedure, or practice; or 

(B) when the agency for good cause finds (and incorporates the 
finding and a brief statement of reasons therefor in the rules is- 
sued) that notice and public procedure thereon are impracticable, 
unnecessary, or contrary to the public interest. 

(c) After notice required by this section, the agency shall give inter- 
ested persons an opportunity to participate in the rule making through 
submission of written data, views, or arguments with or without oppor- 
tunity for oral presentation. After consideration of the relevant matter 
presented, the agency shall incorporate in the rules adopted a concise 
general statement of their basis and purpose. When rules are required by 
statute to be made on the record after opportunity for an agency hear- 
ing, sections 556 and 557 of this title apply instead of this subsection. 

(d) The required publication or service of a substantive rule shall be 
made not less than 30 days before its effective date, except — 

(1) a substantive rule which grants or recognizes an exemption or 
relieves a restriction; 

(2) interpretative rules and statements of policy; or 

(3) as otherwise provided by the agency for good cause found and 
published with the rule. 

(e) Each agency shall give an interested person the right to petition 
for the issuance, amendment, or repeal of a rule. 

Another provision of the APA ^" states that for these purposes 

"rule" means the whole or a part of an agency statement of general or 
particular applicability and future effect designed to implement, inter- 

>» Administrative Procedure Act § 2(c). 5 U.S.C. § 551(4) (Supp. IV, 1969). On the defini- 
tion of "rule" see 1 K. Davis, Administrative Law Treatise § 5.02 (1958). 



REC. l(i. APA RULEMAKING EXEMPTIONS 311 

pret, or prescribe law or policy or describing the organization, procedure, 
or practice requirements of an ap:ency and includes the approval or pre- 
scription for the future of rates, wages, corporate or financial structures 
or reorpranization thereof, prices, facilities, appliances, services or allow- 
ances therefor or of valuations, costs, or accounting:, or practices bearinp 
on any of the foregoing. 

The specific question to be examined here is whether section 
553 satisfactorily accommodates the competing interests involved 
insofar as it unqualifiedly exempts from the required rulemaking 
procedures of that provision all rulemaking "relating to . . . 
public property, loans, grants, benefits, or contracts." Because of 
the strong societal interests in assuring public participation in 
the rulemaking process, these section 553(a)(2) exemptions 
may be justified only insofar as they are narrowly tailored to 
preserve those other societal interests conflicting with the need 
for public involvement in the process, in a degree related to 
their comparative importance. That is, exemptions from an ob- 
ligation imposed on agencies to implement public participation 
in rulemaking should be countenanced only to the extent to 
which they are absolutely necessary to preserve other values of 
equal or greater importance. 

The inquiry here is intentionally limited to the section 553(a) 
(2) exemptions for "public property, loans, grants, benefits, or 
contracts." The present study will not consider the merits of 
any other exemptions contained in section 553. It will not, for 
example, consider the section 553(b) (A) and section 553(d) (2) 
exemptions for interpretive rules and statements of policy, the 
section 553(a)(1) exemptions for "military or foreign affairs 
function [s]," or the section 553(a) (2) exemption for "a matter 
relating to agency management or personnel." 

There are several reasons why this study will not even consider 
the other section 553(a) exemptions just noted. The latter ex- 
emptions involve problems that are distinctly separable from, 
and more difficult to resolve satisfactorily than, those associated 
with the former exemptions. The interests underlying the in- 
clusion of the other exemptions in the statute are severable in 
most respects from the interests said to justify the former. There 
also seems to be greater demand for abolition of the "public 
property, loans, grants, benefits, or contracts" exemption than 
for the other unqualified section 553(a) exemptions. Moreover, 
there is a greater willingness among the government agencies 
involved to suffer a modification of these (a) (2) exemptions than 
the others. Practically speaking, the military, foreign affairs, 



312 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

and agency management exemptions seem to be more impervious 
to change than the section 553(a) (2) exemptions to be examined 
here. Lastly, the exemptions on which this Article v^^ill concen- 
trate can analytically be considered as a unit, separate from the 
others; and of all the section 553(a) exemptions, they may do 
the greatest damage with the least justification. 

Of course, other exemptions contained in section 553 will be 
scrutinized to the extent that this becomes necessary to analyze 
properly the problem under consideration. The above discussion 
is in no way meant to suggest that the exemptions for the military, 
foreign affairs, and agency management functions are unrelated 
to, or completely separable from, those section 553(a)(2) provi- 
sions being examined here. Indeed, if reform is required in this 
area, it may be difficult in the long run without some modification 
of all these exemptions. For example, modification or elimination 
of the contracts exemption in section 553(a) (2), should that prove 
desirable, would still leave virtually all contracts for military pro- 
curement excluded from section 553 under the military functions 
exemption of subsection (a)(1). And elimination of the public 
property exemption would still leave rulemaking relating to the 
largest portion of federal property exempt, because it is owned 
by the Department of Defense and used in the performance of 
military functions. 

However, an evaluation of the section 553 exemptions may be 
made most satisfactorily in steps. If the "public property, loans, 
grants, benefits, or contracts" exemption can be adequately dealt 
with here, future studies may more easily be able to move on to 
a dispassionate appraisal of the desirability of the other section 
553 exemptions. The current study will, therefore, deal only with 
these exemptions which will be referred to throughout the re- 
mainder of this Article as the section 553(a)(2) or subsection 
(a) (2) exemptions. 

II. The Requirements of Section 553(b) -(e) 

Subsections (b)-(e) of section 553 attempt to assure that the 
public has an opportunity to participate meaningfully in the 
rulemaking process. The provisions of section 553 (b) require 
that an agency contemplating the issuance of a substantive rule " 



** Section 553(b) (A) expressly exempts "interpretive rules, general statements of policy, or 
rules of agency organization, procedure, or practice" from the notice requirements. See U.S. 
Dept. of Justice, Attorney General's Manual on the Administrative Procedure Act 30 
(1947) [hereinafter cited as Attorney Geinekal's Manual], stating that this restricts the 
application of the notice and participation requirements in what is now §§ 553(b)-(c) "to 
substantive rules issued pursuant to statutory authority" (citing a portion of the statute's 
legislative history, S. Doc. No. 248, at 19). 



REC. 1(5. APA RULEMAKING EXEMPTIONS 813 

must publish a notice in the Federal Register of the proposed 
rulemaking indicating the time, place, and nature of the public 
rulemaking proceeding, and a statement of the specific legal au- 
thority under which the rule is proposed.'- In addition, the agency 
must include either the actual provisions of the proposed rule, 
or a summary statement of the subjects or issues to which they 
relate. The notice involved "must be sufficient to fairly apprise 
interested parties of the issues involved, so that they may pre- 
sent responsive data or argument relating thereto" as they are 
entitled to do under the following subsection of section 553.'"' 
The agency has the option of dispensing with such publication 
in the Federal Register only if the notice requirement described 
above is functionally satisfied because all "persons subject there- 
to are named and either personally served or otherwise have 
actual notice thereof in accordance with law." 

After giving notice, agencies are required by section 553(c) to 
accord interested persons a chance to participate in the partic- 
ular rulemaking involved "through submission of written data, 
views, or arguments with or without opportunity for oral pres- 
entation." In practice, the precise procedure actually utilized 

may take a variety of form: informal hearings (with or without a steno- 
graphic transcript), conferences, consultation with industry committees, 
submission of written views, or any combination of these. ... In each 
case, the selection of the procedure to be followed will depend largely 
upon the nature of the rules involved. The objective should be to assure 
informed administrative action and adequate protection to private inter- 
ests." 

It must be reiterated, however, that according to the statute, 
interested persons must at the very minimum be afforded an op- 
portunity to submit "written data, views, or arguments with or 
without opportunity for oral presentation." ^-' 

An agency must review the materials presented to it in the 
course of such public rulemaking proceedings and include in any 
rules resulting from this process a statement of their basis and 



•^ The House Report on the APA stated that "[t]he required specification of legal authority 
must be done with particularity. Statements of issues in the general statutory languaKe of 
legislative delegations of authority to the agency would not be a compliance with the section." 
S. Doc. No. 248, at 258. 

" S. Doc. No. 248, at 200, 258. See also California Citizens Band Ass'n. v. United SUtes. 
375 F.2d 43, 48-49 (9th Cir. 1967), stating that the section requiring that notice be given 
concerning contents of proposed rules of the administrative agency "does not require an 
agency to publish in advance every precise proposal which it may ultimately adopt as a rule. . . . 
A notice of rulemaking is sufficient if it provides a description of subjects and issues involvetl." 

"Attorney General's Manual 31. The legislative history clearly indicates that § 553(c) 
"leaves agencies free to choose from the several common types of informal public rule making 
procedures, the simplest of which is to permit interested persons to submit written views or 
data . . . ." S. Doc. No. 248, at 19. 

" S. Doc. No. 248, at 200, 259. 



314 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

purpose.^^ Nevertheless, it is clear that the statute "does not re- 
quire the formulation of rules upon the exclusive basis of any 
'record' made in informal rulemaking proceedings." ^^ However, 
where statutes require a particular kind of rule to "be made on 
the record after an opportunity for an agency hearing" other 
provisions of the Administrative Procedure Act outlining more 
formal hearing requirements will govern that proceeding instead 
of these informal section 553 provisions ; ^^ and in such a case, 
the rule must be made on the formal "record" so adduced. 

Neither the advance notice nor public participation require- 
ments outlined above apply in those cases where "the agency 
for good cause finds (and incorporates the finding and a brief 
statement of the reasons therefor in the rules issued) that notice 
and public procedure thereon are impracticable, unnecessary, or 
contrary to the public interest." The provision just quoted will 
be discussed in more detail later in this Article. 

Two other subsections of section 553 impose conditions with 
respect to rules and rulemaking that are operative even if the 
notice and public participation requirements of section 553(b)- 
(c) are not applicable because they come within the "good cause" 
exception just noted. Section 553(e) insists that every agency 
give interested persons "the right to petition for the issuance, 
amendment, or repeal of a rule." The mere filing of such a peti- 
tion does not, however, require an agency to engage in a public 
rulemaking proceeding on that subject. ^^ The agency must act 
on the petition in accordance with its procedures promulgated 
under other provisions of the APA,-" and may grant such a peti- 
tion, undertake public rulemaking proceedings in relation to it, 
or deny the petition. The chief practical significance of this ex- 
press right to petition requirement seems to be that the denial 
of a section 553(e) petition is governed by the provisions of 
section 555(e), which require a prompt notice of the denial "ac- 
companied by a brief statement of the grounds. . . ." ^^ 

A further requirement may be found in section 553(d) relat- 
ing to the time period that agencies must allow between the pro- 



'* "The agency must analyze and consider all relevant matter presented. The required 
statement of rules issued should not only relate to the data so presented but with reasonable 
fullness explain the actual basis and objectives of the rule." Id. at 201, 259. 

"Attorney Gejneral's Manual 31 citing Hearings on S. 67i, S. 675 and S. 918 Before a 
Subcomm. of the Senate Comm. on the Judiciary, 77th Ckjng., 1st Sess., ser. 1, pt. 3, at 444 
(1941) [hereinafter cited as 19Jtl Hearings), which is limited authority for the otherwise sound 
conclusion of the Manual on this point because the testimony referred to is that of only a 
single person. Commissioner C. B. Aitchison of the ICC). 

"5 U.S.C. §§ 556-557 (Supp. IV, 1969). 

19 Attorney General's Manual 38 ; S. Doc. No. 248, at 201, 260. 

^^5 U.S.C. §§ 552(a)(1) (B)-(C) (Supp. IV, 1969) : S. Doc. No. 248, at 260. 

=* Attorney General's Manual 39 (citing S. Doc. No. 248, at 201, 260). 



REC. 16. APA RULEMAKING EXEMPTIONS 815 

mulgation of a substantive rule and its effective date. It states 
that the required publication of a substantive rule under section 
552, the freedom of information provision of the Act, must be 
made at least thirty days prior to the effective date.- The 
thirty day notice provision, like the right to petition an agency 
for the issuance, amendment, or repeal of a rule, is applicable 
even if the public rulemaking procedures of section 553(b) -(c) 
are not, because they are found to be "impracticable, unneces- 
sary, or contrary to the public interest." -' Exceptions are provided 
to this last noted time requirement, however, in those situations 
where the substantive rule "grants or recognizes an exemption or 
relieves a restriction." An exemption is also provided where the 
agency decides, "for good cause found and published with the 
rule," that such a minimum thirty day period between the time 
of a rule's publication and its taking effect is unnecessary. This 
last exemption will also be discussed in more detail later in the 
Article. 

III. Section 553 (b)-(e) in Relation to the 
Subsection (a) Exemptions 

The exemptions contained in section 553(a) for rulemaking 
involving "a military or foreign affairs function," rulemaking 
"relating to agency management or personnel," and rulemaking 
relating to "public property, loans, grants, benefits, or con- 
tracts" operate to exclude entirely, and without qualification, all 
rulemaking in these categories from every provision of subsections 
553(b) -(e). Consequently, none of the requirements imposed on 
administrative agencies by the provisions previously discussed are 
applicable to these specifically exempted classes of rulemaking. 
This means, for example, that unless some other statute specifical- 
ly directs the contrary,^* agencies making rules relating to "public 

•^ See Attorney General's Manual 36, statiriK that "[t]he discussion on section . . . 
[5r3(d)] in the reports of both the Senate and House Committees on the Judiciary makes 
clear that the phrase 'The require<l publication or service of any substantive rule' does not 
relate back or refer to the publication of general notice of proposed rulemaking re<iuired by 
[§ 553(b)] ; rather it is a requirement that substantive rules which must be published in the 
Federal Register [see § 553(a) (1) (D)] shall be so published at least thirty days prior to their 
effective date." The language of § 553(c) does, of course, lend itself more readily to the op- 
posite construction, but it seems to have been construed only in the manner suggested by the 
Attoknf.y General's Manual. See also Landsen v. Hart, 168 F.2d 409 (7th Cir. 1948) : Task 
Force Report 160. The legislative history referred to may be found in S. Doc. No. 248, at 201, 
259. 

" S. Doc. No. 248, at 200-01, 259. 

" Another statute will control if it directs that certain kinds of rules relating, for example, 
to loans, grants, or benefits be made in accordance with the requirements of §§ 553(b)-(e). See 
5 U.S.C. § 559 (Supp. IV, 1969). The following statement made during the Congressional 
hearings on the APA supports this conclusion : "These exceptions would not, of course, re- 
lieve any agency from requirements imposed by other statutes." S. Doc. No. 248, at 199. 



316 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

property, loans, grants, benefits, or contracts" are never, under 
any circumstances, obliged as a matter of law to do any of the 
following things: (1) publish notice of proposed rulemaking in 
the Federal Register according to specifications of section 553 
(b) ; (2) give interested people a chance to participate in the 
formulation of rules through submission of views or data, accord- 
ing to the terms of section 553(c) ; (3) give interested persons 
"the right to petition for issuance, amendment, or repeal of a 
rule," according to the terms of section 553(e) ; or (4) publish 
substantive rules at least thirty days before their effective date 
as required by section 553 (d).-'^ The blanket language of section 
553 (a) makes no allowance whatsoever for the possibility that 
certain rulemaking within its terms may need to be exempted 
from some of the subsection (b)-(e) requirements and not from 
others. Similarly, this provision does not recognize that certain 
rulemaking within its terms may need exemption from all of 
those requirements and other such rulemaking from none of 
them. 

The exemptions currently found in section 553(a) obviously 
proceed upon the assumption that a sweeping judgment can be 
made concerning those categories of subjects. The policies 
favoring public participation in rulemaking are outweighed by 
the consequences of subjecting these particular classes of rule- 
making to the requirements of subsections (b)-(e), or the con- 
sequences of utilizing a more flexible approach to determine 
whether, in any given case, they should be subjected to those re- 
quirements. The validity of this assumption must be carefully 
examined and tested with respect to the exemptions for "public 
property, loans, grants, benefits, or contracts." 

It should be stressed that in those cases where rulemaking is 
excepted from the requirements of section 553 by subsection (a), 
agencies may use any rulemaking procedure they please, with or 
without public participation, unless another statute specifies the 
contrary. The legislative history of the Administrative Procedure 
Act clearly indicates, however, that none of the blanket introduc- 
tory exceptions from the section "is to be taken as encouraging 
agencies not to adopt voluntary public rule making procedures 
where useful to the agency or beneficial to the public. The excep- 
tions merely confer a complete discretion upon agencies to de- 
cide what, if any, public rule making procedures they will 
adopt in a given situation within their terms." -" 



25 Attorney General's Manual 39 ; S. Doc. No. 248, at 199, 257. 
2« S. Doc. No. 248, at 199, 257. 



REC. IC). APA RULEMAKING EXEMPTIONS 317 

However, the fact is that most agencies do not usually exercise 
their discretion to follow the requirements of section 533 (b)-(e) 
when they are not bound to do so. Consider agency practice with 
respect to that rulemaking of primary concern here — rulemak- 
ing relating to "public property, loans, grants, benefits, or con- 
tracts." A survey prepared for this study, and distributed under 
the auspices of the Rulemaking Committee of the Administra- 
tive Conference of the United States during the summer of 1969, 
asked each federal agency : 

Does your department or agency follow the procedui'es specified by § 553 
(b)-(e) for any rulemaking exempted from those provisions by § 553 
(a) (l)-(2) ? If it does, list the particular kinds of rulemaking exempted 
by § 553(a) (l)-(2) for which your department or agency has volun- 
tarily chosen to follow some or all of the procedures specified by 
§ 553(b)-(e). Explain. Also list the frequency with which it voluntarily 
follows those requirements for such exempted rulemaking, and the spe- 
cific circumstances under which it does so. 

Responses to this question by those agencies reporting that they 
make rules relating to "public property, loans, grants, benefits, 
or contracts" -• indicate a pattern. Rulemaking excluded by this 
part of subsection (a) (2) from the mandatory terms of section 
553(b) -(e) usually will not be conducted according to those pro- 
cedures. That is, most responding agencies indicated that they 
do not normally follow the provisions of section 553(b) -(e) when 
their rulemaking is excepted from them by subsection (a) (2).^*' 
And while a number of agencies indicated that they engaged in a 
contrary practice with respect to such rulemaking, most of these 
admitted to some inconsistency in this regard.-" 



-' The following agencies responded to the survey questionnaire prior to September 8, 1969, 
and indicated that they made rules relating to "public property, loans, grants, benefits, or 
contracts": Department of the Treasury; Small Business Administration; Department of 
Agriculture ; Department of Defense ; Veterans' Administration ; Post Office Department ; 
Department of Commerce ; Atomic Energy Commission ; Department of Transportation ; 
Department of Labor ; the Department of Health, Education and Welfare ; Office of Economic 
Opportunity ; and the National Aeronautics and Space Administration. It is the responses 
of the above agencies that will be discussed in this study [hereinafter cited as 1969 Survey]. 

=* See, e.g.. the following responses to the 1969 Survey question. The Atomic Energy Commis- 
sion reported that "The A. E.G. does not follow the procedures specified by 5 U.S.C. 553(b)-(c) 
for the rulemaking . . . which is exempted from such procedures." The Small Business Admin- 
istration reported that "S.B.A. does not, as a general rule, follow the requirements of notice 
of proposed rulemaking and public participation for programs exempt from section 553, al- 
though some qualifying comment may be appropriate." The Department of Health, Education 
and Welfare reported that "the Department has followed the procedures specified by 5 U.S.C. 
553(b)-(e) for rulemaking exempted from those provisions by § 553(a) (2), on occasion. . . ." 
The Department of Defense and the Veterans' Administration answered "No," and the 
Department of Agriculture's various divisions indicated that they rarely, if ever, followed 
usual §§ 553(b)-(e) procedures in cases of rulemaking exempted by § 553(a)(2). 

-^ See, e.g., the following responses to the 1969 Survey question. The Post Office Department 
stated that "The Department normally follows the procedures of sec. 553(b)-(e) for any rule- 
making leading to the adoption of regulations relating to domestic mail service when it is 
considered that the regulation may have a substantial or adverse effect on the public. ... By 



318 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

Not only do ag-encies generally fail to follow the procedures of 
section 553(b) -(e) in most cases where they are not required to 
do so, but the public rulemaking procedures actually utilized by 
administrators in the excepted situations are frequently inade- 
quate substitutes for those found in section 553(b')-(e) .^" The 
survey prepared for this study asked reporting agencies : 

What rulemakiner procedures does your department or ag^ency use in those 
cases where rulemaking: is exempted by §553 (a) (l)-(2) from the re- 
quirements of § 553(b)-(e) and it does not choose, in its discretion, to 
follow § 553(b) -(e)? Be as specific as possible. Include a concrete ex- 
ample of each of the different kinds of rulemaking procedures utilized by 
your department or agency when it does not follow § 553(b) -(e) be- 
cause th3 rulemaking involved is exempted by § 553(b) (l)-(2). 

Responses indicate that substitute procedures are not always con- 
sistent and do not, in many cases, assure adequate notice to affect- 
ed parties and a sufficient opportunity for their participation. In 
some cases, the agencies may simply determine the rule they 
think appropriate and promulgate it, without first notifying or 
consulting with anyone outside the Government. In other such 
cases, agencies give notice to, and engage in informal consulta- 
tion with, whomever they happen to think appropriate under the 
circumstances.''^ The actual procedures utilized in those cases 



way of illustration it was undertaken on twelve occasions during 1968." However, much rule- 
making relating to Post Oflfire contracts and the management of Post Office property seems 
not to be subjected to usual § 553 requirements. The Department of Transportation stated that 
"With respect to Parts 151, 153. 155, 159, 165, 167, and 169 of title 14, C.F.R. ... the Depart- 
ment does follow all of the section 553 rulemaking procedures, even though exempted therefrom 
under 553(a)(2), except for minor or technical amendments." However, this means that it 
does not follow § 553(b) -(e) with respect to rulemaking relating to other Department pro- 
grams which it lists as exempted by the § 553(a)(2) exceptions under study here. The De- 
partment of Commerce reported that some of its divisions, like the Office of State Technical 
Services, usually follow § 553(b)-(e) in cases exempted by subsection (a)(2) ; while others, 
like the Domestic and International Business Division, do not. The Department of Labor also 
indicated that it usually follows §§ 553(b)-(e) with respect to rulemaking of general 
applicability. 

'"Imposition of the §§ 553(b) -(e) requirements on rulemaking currently excluded from the 
ambit of those provisions by § 553(a) (2) has been opposed by some agencies on the grounds 
that it is unnecessary as applied to them. They maintain that substitute procedures actually 
utilized assure adeiiuate notice and participation. Sec e.g.. Hearings on S. 1663 Before the 
Subcomm. on Administrative Practice and Procedure of the Senate Coinin. on the Judiciary, 
88th C<)ng., 2d Sess. 20-22 (General Services Administration) and 494-95 (Dept. of Defense) 
(1964) [hereinafter cited as S. 1663 Hearings']. See also Hearings on S. 518 Before the Sub- 
comm. on Administrative Practice and Procedure of the Senate Comm. on the Judiciary, 90th 
Cong., 1st Sess. 246, 379 (1967) (Veterans' Administration, Dept. of Interior) [hereinafter 
cited as S. 518 Hearings]. These are not, of course, disinterested judgments, and their validity 
is, therefore, disputable. 

'' See, e.g., the following responses to the 1969 Survey question. The Small Business Admin- 
istration reported that "parts 112 and 113 Nondiscrimination in Financial Assistance Programs 
of S.B.A., were prepared internally, but cleared with the Department of Justice. . . . Rules 
setting forth the policies, proceedings, and requirements for loan, procurement, and other 
assistance programs are also prepared internally. But in many cases the programs will re- 
quire or be substantially fostered by contribution from non-governmental sources." The Post 
Office noted that "when statutory procedures are not used the Department develops its 
regulations through informal discussions with those to be affected, by negotiation, or by internal 



REC. Ui. APA RULEMAKING EXEMPTIONS 319 

where agencies are not required to follow section 553 because of 
subsection (a) (2) may, therefore, often result in a failure to 
invite interested persons to participate in the formulation of a 
rule.^- 

Some agencies do utilize substitute procedures that in fact as- 
sure adequate notice to affected parties, and a sufficient opportu- 
nity for their participation. In a number of cases, those substitute 
procedures have been specially instituted to cure, at least partial- 
ly, the failure of section 553 to cover rulemaking relating to 
"public property, loans, grants, benefits, or contracts." Chief 
among these is a procedure announced by the Bureau of the Budg- 
et in Circular No. A-85 on June 28, 1967. This document applies 
to most "regulations and revisions thereof which implement a 
Federal Assistance Program that includes among its eligible re- 
cipients state or local governments or quasi-public agencies." " It 
provides that an agency shall give the Advisory Council on Inter- 
governmental Relations (ACIR) a copy of each such proposed 
regulation at least 45 days before it is to be promulgated. If legal 
or other circumstances make this impossible, the agency is to 
advise the ACIR of this fact, and at least provide it with a sum- 
mary or abstract in lieu of the regulation.^* The ACIR is then 
to transmit copies of such materials to a number of specific state 
and local government associations such as the National Gover- 
nor's Conference, Council of State Governments, and the Unit- 
ed States Conference of Mayors, who will then have up to three 



decision-makinpr processes." The Department of Agriculture's Rural Electrification Agency 
reported that "R.E.A. Bulletins are formulated by staff members responsible for the program 
aspects involved in the proposed bulletin with final review and approval by an Assistant Ad- 
ministrator, Deputy Administrator, or the Administrator. Within the discretion of R.E.A. , 
drafts of bulletins may be discussed informally with representatives of borrowers, contractors, 
engineers, and other parties interested in R.E.A. programs prior to issuance." The Production 
Stabilization Division of the Department of Agriculture noted that "almost without exception, 
the final regulation is published in the Federal Register without prior notice . . . ." The same 
Department also stated that new rules "are prepared by the Farmers Home Administration 
National Office, with the advice and assistance of the Office of the General Counsel of this 
Department. . . . Field employees are in daily contact with Farmers Home Administration 
borrowers and other recipients of Farmers Home Administration assistance and are fully 
cognizant of their needs and views. Field employees are many times called upon to serve on 
committee or submit their comments in connection with the development or revision of F.H.A. 
instructions of major significance." See also responses to a somewhat similar survey (luestion 
supporting the same point in Bonfield, Representation for the Poor in Federal Rulemaking, 67 
Mich. L. Rev. 511, ,'547, nn. 41 and 42 (15"69) (hereinafter cited as Bonfieldj. 

" Officials of a number of major organizations purporting to represent some segment of the 
poor have complained, for example, of inadequate notice with respect to proposed rules of 
interest to them, and of many agencies' lack of interest in ascertaining their views in re- 
lation to rulemaking affecting the poor. A number of federal agencies have also tactily admitted 
that current rulemaking proce<lures utilized in some rulemaking relating to the subjects ex- 
empted by § 553(a) have been inadequate to assure sufficient representation for the poor in 
federal rulemaking. See Bonfield 518-19. 

" B.O.B. Circular No. A-85, § 4 (June 28, 1967). 

"/d. § 5(a). 



320 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

weeks within which to comment to the federal agency involved 
on the proposed regulation.^^ 

As helpful as BOB Circnlar A-85 may be, it is no substitute for 
the more broadly applicable requirements of section 553(b) -(e). 
The protections of the former scheme do not, for example, apply 
to rulemaking relating to grants made exclusively to private 
parties or organizations. Moreover, Circular A-85 fails to assure 
a very large number of "interested" or "affected" persons notice 
of, or an adequate opportunity to participate in, rulemaking of 
the type covered by that document for two reasons. In the first 
place, the document assumes that the procedure contained therein 
will only apply to that rulemaking "significant enough to be put 
through the consultation arrangements," leaving it to the discre- 
tion of the agencies to decide which rulemaking is significant. 
The BOB effort does not even supply a standard to measure what 
is to be considered "significant" for this purpose. Secondly, the 
Circular in question does not assure many interested persons no- 
tice and an opportunity to participate in the regulation making 
within its terms. Rather, it provides notice and a chance to com- 
ment only to certain state and local government associations and, 
through them, to their members. As the ultimate beneficiaries of 
particular federal programs granting aid to state and local gov- 
ernments, many classes or groups of citizens have a vital interest 
in regulations relating to these programs. Their interests, on oc- 
casion, may be different from, or even in opposition to, the inter- 
ests of the political heads of state and local governments whose 
participation in rulemaking is sought to be protected by this 
scheme. Yet interested citizens are not assured advance notice 
or an opportunty to participate in such rulemaking relating to 
federal grants by BOB Circular A-85. 

In the end it must be reiterated that the exemption for "public 
property, loans, grants, benefits, or contracts" results in a situa- 
tion in which interested persons are frequently denied notice of, 
and an adequate opportunity to participate in, rulemaking of 
concern to them. To the extent this occurs in any case without a 
justification sufficient to warrant that result, it should not be 
tolerated. As noted previously, the reasons supporting the section 
553(b) (e) requirements for public participation in rulemaking 
are very compelling. The potential damage to sound government 
policy formulation and private rights is great in any case where 
such participation is not assured. The scope and importance of the 

3«7d. § 5(c). 



REC. l(i. APA RULEMAKING EXEMPTIONS 321 

subsection (a) (2) exceptions, and the reasons advanced for 
their existence must, therefore, be examined with special care. 

IV. The Section 553 (a) (2) Exemptions: Their Scope and 
Practical Importance 

A. Generally 

A few general comments should be made about the linguistic 
form in which the subsection (a) (2) exemptions are cast. By 
their terms, these exclusions only apply "to the extent that there 
is involved" rulemaking that is related to "public property, 
loans, grants, benefits, or contracts." The legislative history em- 
phasizes the "to the extent" language, stating that these exemp- 
tions "apply only 'to the extent' that the excepted subject mat- 
ter is clearly and directly involved." ^^ This suggests that where an 
agency makes some rules coming within the introductory exemp- 
tions and some rules that do not, it may ignore the procedures 
of subsections 553 (b)-(e) in the former cases but must follow 
them in the latter cases. Even a single scheme of proposed regula- 
tions must abide by this principle if it is practically divisible 
into particular provisions which involve excluded functions and 
ones that do not. In the report of the Senate Committee on the 
bill that was to become the Administrative Procedure Act, the 
Committee stated that : 

[l]t has avoided the mistake of attempting to oversimplify the measure. 
It has therefore not hesitated to state functional classification and excep- 
tions where those could be rested upon firm grounds. In so doing, it has 
been the undeviating policy to deal with types of functions as such and 
in no case with administrative agencies by name. Thus certain war and 
defense functions are exempted, but not the War or Navy Departments 
in the performance of their other functions." 

Every federal agency is exempted from the usual section 553 
requirements to the extent that they perform the listed functions. 
Drafters of the statute stated that " [w]here one agency has shown 
that some particular operation should be exempted from any 
particular requirement, the same function in all agencies has 
been exempted." '^ Moreover, the purpose or effect of the rules 
relating to any of the excepted subjects is irrelevant since all such 
regulation making is excepted from section 553 by subsection 
(a)(2). Similarly, the type or quantity of public property in- 
volved, or the use to which it is put, and the subject or reason for 



^ S. Doc. No. 248, at 257. See also id. 199. 
" Id. 191. 
»/d. 250. 



322 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

the loans, grants, benefits, or contracts are also immaterial for 
purposes of this all-encompassing exemption. 

On the other hand, rulemaking is arguably not exempt under 
subsection (a) (2) unless it "clearly and directly" relates to 
the excluded subject matter. ^^ This wording suggests that rule- 
making only indirectly or tangentially related to the exempted 
subjects is not to be treated as within the exclusions, and that 
unclear, close, or doubtful cases shoul be treated as outside the 
exemption. Although the lack of the emphatic word "clearly" in 
the Senate Report somewhat dilutes this argument, there are 
strong reasons to construe the introductory exceptions narrowly. 
Most important is the fact that the subsection (a) (2) exclusions 
are in the form of broad, unqualified exceptions to provisions 
implementing a very important general governmental policy favor- 
ing public participation in rulemaking, and those usually opera- 
tive provisions individually contain special detailed exemptions 
for peculiar cases. Moreover, a principal reason for the enact- 
ment of the APA was to secure some standardization of adminis- 
trative procedure.'*° Exceptions from any of its provisions should, 
therefore, usually be construed narrowly in order to achieve that 
result. 

Nevertheless, the language of the section 553(a) (2) exemp- 
tions is very broad. Not only are the listed subjects that are ex- 
cluded specified in terms easily susceptible to wide application, 
but to be exempted the rulemaking in question must only involve 
"a matter relating to" the specified subjects. An attempt to mini- 
mize the significance of the "relating to" language in subsection 
(a) (2) of the statute can be made by arguing that there is little 
if any diff'erence between rulemaking where there is "involved" a 
certain stipulated matter and rulemaking where there is "involved 
a matter relating to" that stipulated matter. Since there is ordi- 
narily a diff"erence in meaning between these phrases, and the 
inclusion of the phrase "relating to" in subsection (a) (2) is un- 
necessary except as a contrast to the subsection in which it is 
omitted, a conclusion that the usage only constitutes a choice of 
style and does not affect content seems difficult to accept. 

The following discussion will attempt to state the main thrust 
of each of the section 553(a) (2) exemptions, and provide some 
illustrative examples of rulemaking they are deemed to ex- 



'^ Id. 199, 257. "Directly" is the language from the Senate Report on the APA and "clearly 
and directly" from the House Report. 

*' McFarland, Analysis of the Federal Administrative Procedure Act, in Federal Administra- 
tive Procedure Act and the Administrative Agencies 22 (G. Warren ed. 1947). See also 
S. Doc. No. 248, at 187, 249. 



REC. 16. APA RULEMAKING EXEMPTIONS 323 

elude."' And assessment will also be made of the importance of the 
rulemaking excluded by subsection (a) (2) from the usual require- 
ments of section 553, and the urgency and care with which these 
exemptions must be examined in order to ascertain whether they 
are justified. 

No attempt will be made in the following discussion to furnish 
any mutually exclusive definition of each of the several terms 
"public property, loans, grants, benefits, or contracts" used in 
section 553 (a)(2). Rather, as noted above, the main thrust of 
each term as commonly understood in everyday government 
parlance will be described. There are two reasons why no effort 
will be made to delineate precisely each term from every other 
term. First, such an effort seems unnecessary for present pur- 
poses. If rulemaking comes within the ambit of any one of these 
terms, it is exempt from usual rulemaking procedures under sub- 
section (a)(2). Second, five neat and mutually exclusive cate- 
gories cannot easily be drawn from the above terms. Upon close 
examination, each of them overlaps at some point with one or 
more of the other of these exemptions. A particular instance or 
class of rulemaking may well fit within two, three, or even more 
of the above categories. Many agencies acknowledged this overlap 
between the terms "public property, loans, grants, benefits, or 
contracts" in responses to the survey prepared for this study. A 
very large number of agencies listed rulemaking which they con- 
sidered to be exempted from section 553 by subsection (a) (2) 
as fitting within two or more of the terms listed in that exclu- 
sion. ""^ 



*^ Data with respect to the way in which administrators actually construe these exemptions 
in their every day aflfairs has been obtained from the survey questionnaire distributed as part 
of this study to all federal agencies. One question asked was ; 

What rulemaking does your department or agency engage in that is exempted from the 
requirements of §§ 553(b)-(e) by §§ 553(a) (l)-(2) ? Be as specific as possible by listing 
the particular programs you administer whose rulemaking is exempt, and for each such 
program the particular part or parts of §§ 553(a) (l)-(2) under which it is exempted. 
Where some rulemaking for a particular program is exempt and some are not, indicate 
which kinds of rulemaking for that program are exempt and which kinds are not. Very 
briefly describe the purpose of each such exempted or partially-exempted program and 
provide citations to the statutes under which it is administere*!. 
Most of the illustrations of exempted rulemaking used in the following section are drawn from 
the responses to this questionnaire. 

*2 The extent to which the terms used in subsection (a)(2) may overlap can best be under- 
stood by the following examples. A loan of federal funds might be deemed to involve "public 
property" as well as "loans" because the money being loaned is property of the national 
government. The same may be true of grants of federal monies and benefits paid out of govern- 
mental resources. A loan also may be considered within the "contracts" exemption because 
the government lends money in consideration of the borrower's promise to return it. The 
same may be said of grants because the United States usually gives them on certain conditions 
which the grantee accepts when he voluntarily takes and uses the grant. A benefit might 
also be deemed to fit within the "contracts" exemption as well as that for "benefits" when 
it is given because of previous financial contributions which were made with the understanding 



324 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

B. Public Property 

Rulemaking involving any "matter relating to . . . public prop- 
erty" is the first section 553(a) (2) exemption of concern to this 
study. The 1947 Attorney General's Manual on Administrative 
Procedure stated that this exclusion "embraces rules issued by any 
agency with respect to real or personal property ovv^ned by the 
United States or by any agency of the United States. . . . The 
term 'public property' includes property held by the United States 
in trust or as guardian ; e.g., Indian property." *^ The legislative 
history of the APA directly supports this assumption." Con- 
sequently, the term "public property" would seem to have a broad 
content, exempting from section 553 rules relating to any form 
of property held by the United States in almost any capacity. 

Although an argument has been made that the "public prop- 
erty" exemption only applies to property held by the United 
States in a "proprietary" capacity,*'' such a position has very 
little to recommend it. Aside from the difficulty in distinguish- 
ing a "proprietary" capacity from other capacities because the 
content of that term is illusory at best,**' neither the language nor 
legislative history of the Act support any such limitation. The 
little evidence mustered to support this view can be easily ex- 
plained on grounds other than an intent to achieve that result.*^ 

The areas into which it has been argued that the "public prop- 
erty" exemption should reach are considerably more varied than 
one might expect. For example, a question arose over whether 
regulations concerning wild birds under the Migratory Bird 
Treaty Act were subject to what is now section 553 ; that is, 
were wild birds "public property" so that regulations relating to 



that subsequent benefits would be paid. Similarly, rulemaking relating to "grants" and rule- 
making relating to "benefits" may overlap. Aside from any initial difficulties in distinguishing 
those terms, the United States frequently gives grants to the states to finance benefit pro- 
grams as, for example, in the Aid to Families with Dependent Children Program. Federal 
rulemaking relating to that program may well relate both to "grants" and "benefits" since 
the benefits ultimately paid to the recipients under the program may well be considered federal 
benefits for purposes of § 553(a) (2). 

43 Attorney General's Manual 27. 

"S. Etoc. No. 248, at 257. 

45 Wheatley, A Study of Administrative Procedures — The Department of Interior, 43 GEO. L.J. 
166, 177-80 (1955). The floor manager of the APA in the House stated that "the exemption 
of proprietary matters is included because in those cases the Government is in the position 
of an individual citizen and is concerned with its own property, funds, or contracts." S. Doc. 
No. 24, at 358. See also id. 199 (stating that the § 553(a) (2) exemptions deal with "pro- 
prietary matters"). 

■** Proprietary is defined as "held as the property of a private owner ; relating or belonging 
to a proprietor." Webster's Third New International Dictionary 1819 (1966). See also 
Black's Law Dictionary 1384 (rev. 4th ed. 1968). 

*' The legislative history relied on was undoubtedly intended to constitute simply an explana- 
tion of why the public property exclusion was included, or to serve as a shorthand means of 
designating these exclusions, and in no way intended as a limitation upon them. 



REC. 1(5. APA RULEMAKING EXEMPTIONS 325 

them were exempt from the usual rulemaking requirements? 
After noting that at common law wild animals are the property 
of the state in which they are found, the Department of Interior 
in a memorandum opinion stated: 

As have been shown, the cases which speak of title to or ownership of wild 
animals or birds placed the title or ownership in the states, not in the Fed- 
eral Government. The exception of "public property" from the purview of 
[APA] section 4 extends only to property of the United States. Conse- 
quently, the exception would not cover rules regulating the taking of wild 
game on lands other than those of the Government.*" 

The Post Office has also been very much involved with the 
"public property" exemption. In Doehla Greeting Cards, Inc. v. 
Summer field,'*'' plaintiff challenged an increase in postal rates. 
One of his grounds for the suit was that the Interstate Commerce 
Commission had not held a hearing in conformance with usual 
procedures prior to giving its required consent to the postal rate 
increase. The court replied that "the hearing provisions of the 
Administrative Procedure Act ... § 4 ... do not apply, as mail 
rates are within the second exception, 'any matter relating to 
agency management or personnel or to public property, loans, 
grants, benefits, or contracts'." •" While the court was not clear 
as to which of the particular exceptions in section 553(a)(2) 
applied to the setting of mail rates, it was probably referring 
to the "public property" exemption. Many cases have suggested 
that the United States has a "property right" and a "proprietary 
interest" in the postal service." 

The cases which would support such a theory could be distin- 
guished from the present question because they were concerned 
with the reach of federal power to protect, foster, and regulate 
the postal system rather than the extent to which postal 
authorities were exempted from the usual public rulemaking 



•'SM-34864 to the Director, Fish and Wildlife Service (Feb. 18, 1947), quoted in Wheatley, A 
Study of Administrative Procedures — The Department of the Interior, 43 Geo. L.J. 166, 177 
(1955). 

«116 F. Supp. 68 (D.D.C. 1953). 

«> Id. 75. 

^^ See generally Delaney, The Federal Administrative Procedure Act and the Post Office De- 
partment, in Federal Administrative Procedure Act and the Administrative Agencies 200-03 
(G. Warren ed. 1947) (citing In re Deba. 158 U.S. 564, 583 (1895)) ; Searight v. Stokes, 44 
U.S. (3 How.) 151, 169 (1845) ; Electric Bond and Share Co. v. S.E.C., 92 F.2d 580 (2d Cir. 
1937) : Boeing Air Transport v. Farley. 75 F.2d 765 (D.C. Cir. 1935) ; Union Pacific R. Co. 
V. United States, 219 F. 427 (8th Cir. 1915) ; United States v. Atlantic Coast Line R. Co., 215 
F. 56 (4th Cir. 1914) ; Cushman, National Police Power Under the Postal Clause of the Con- 
stitution, 4 Minn. L. Rev. 402 (1920) ; Note, Legislation, the Expanding Postal Power, 38 
CoLUM. L. Rev. 474, 478 (1938)). See also Staff of House Comm. on Government Operations, 
85th Cong., 1st Sess., Sur%-ey and Study of Administrative Organization, Procedure and 
Practice in the Federal Agenoes 861-63 (Comm. Print 1957) [hereinafter cited as 1957 House 
Study]. 



326 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

requirements. Nevertheless, distinctions of this kind seem to be 
considered irrelevant. At the time of the APA's adoption the 
Assistant Solicitor General of the United States informed the 
Solicitor of the Post Office Department that : 

I have noted the judicial decisions cited in your letter and which emphasize 
the proprietary interest of the Federal Government in the postal system. It is 
well known that the United States owns the post office properties and facili- 
ties, and that the postal deficits are met by appropriated funds. I concur in 
your opinion that rules issued by the Postmaster General to prescribe the 
rates, zones, weight limits, and similar conditions upon which mail service is 
rendered to the public, involve only matters relating to public property, and 
are accordingly exempt from the provisions of Section 4 of the Administra- 
tive Procedure Act." 

Further clarification of the extent of the meaning of "public 
property" can be gleaned from the Attorney General's Manual. 
The Manual states, by v^ay of example, that under the exemption 
for "public property" rulemaking that relates to 

the public domain, i.e., the sale or lease of public lands or of mineral, tim- 
ber or grazing rights in such lands, is exempt from the requirements of 
section 4. The exemption extends, for example, to rules issued by the Ten- 
nessee Valley Authority in relation to the management of its properties, 
and by the Maritime Commission with respect to ships owned by the 
United States." 

Some other examples of rulemaking deemed exempt from section 
553 by the "public property" provision include rulemaking under- 
taken by the General Services Administration relating to the 
management and use of public buildings, surplus federal prop- 
erty, and stockpiled materials ; rulemaking undertaken by the 
Department of Agriculture relating to the use and disposition of 
farm surplus commodities and the national forest system lands ; 
rulemaking undertaken by the Department of the Interior relat- 
ing to the use of the National Parks; and rulemaking under- 
taken by the Department of Transportation relating to the use 
and occupancy of the national capital airports. 

The subject matter removed from usual rulemaking require- 
ments by this provision is staggering in size both absolutely and 
in relation to our national resources. Consider the following data 
with regard to the different types, quantities, and values of fed- 
eral property, the making of rules in relation to which is excluded 
from usual requirements for advance notice and public participa- 
tion. On June 30, 1966, the federal government owned a total of 
$347 billion in real and personal property which was controlled 



" Delany, supra note 51, at 202. 

53 Attorney General's Manual 27. 



REC. 16. APA RULEMAKING EXEMPTIONS 327 

by various agencies. Of this amount, $102.6 billion represents the 
estimated value of real property in the possession of the United 
States. '^ Federal land holdings amounted to a total of 764,762,000 
acres representing 33.7 '^r of the total land area of the country. 
They constituted as high a percentage of total area as 97%, 
86%, 67%, and 64 ^^ in Alaska, Nevada, Utah, and Idaho respec- 
tively.'' In addition, the federal government owned some 423,634 
buildings containing a total of about 2.5 billion square feet 
of space.''' The remaining portion of federal property consisted 
of personalty holdings of all kinds including machinery and equip- 
ment, commodities, materials and supplies, and accounts and 
loans receivable, which were valued at $244.4 billion. Of this, 
$3.4 billion represented the value of commodities for sale by the 
national government." 

The "public property" of the United States can be roughly 
classified on a functional use basis. The following table shows 
the primary breakdown on this basis as of June 30, 1966.^® 

TABLE A 

Functional Use of "Public Property" as of June 30, 1966 

National Defense Purposes $208.5 billion 

International Affairs & Finance 26.4 billion 

General Government Purposes 22.6 billion 

Agriculture & Agricultural Resources 12.8 billion 

Commerce and Transportation 11.2 billion 

Education 5.7 billion 

Housing & Community Development 4.6 billion 

Space Research & Technology 3.8 billion 

Veterans' Benefits & Services 3.4 billion 

Health, Labor & Welfare 798.0 million 

As the above table clearly indicates, the impact on the daily 
lives of millions of Americans from regulations governing the 
management, use, and disposition of these vast governmental as- 
sets is enormous. 

C. Loans 

The exemption for rulemaking involving matters relating to 
"loans" covers a very wide spectrum of government policy- 

" Staff of House Comm. on Government Operations, 89th Cong.. 2d Sess., Federal Real 
AND Personal Property Inventory Report (Civilian and Military) of the United States 
Government Covering its Properties Located in the United States as of June 30, 1966. 
at 11 (Comm. Print 1966) [hereinafter cited as Property Inventory Report]. 

" 1968 Statistical Abstract of the United States 194 [hereinafter cited as Statistical 
Abstract]. 

"* Property Inventory Re3>ort 247. 

»Wd. 11. 

«7d. 12-13. 



328 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

making. The term "loan" covers "something lent for the borrow- 
er's temporary use on condition that it or its equivalent be re- 
turned." -'^ "Loan" covers an "advance of money with an absolute 
promise to repay," a "[b] ailment without reward, consisting of 
the delivery of an article by the owner to another person . . . and 
returned either in specie or in kind," and may either be with or 
without interest or other similar charge payable to the lender by 
the borrower.^" 

Two examples of how the "loans" exception would operate in 
practice will illustrate its breadth. It seems obvious that this 
exception would make the rulemaking requirements of section 
553 inapplicable to the usual functions of government lending 
agencies, ^^ including their programs which seek to guarantee 
loans, "since they are matters relating to public loans." ^^ Not 
surprising then is the holding in Barrington Manor Apartments 
Corp. V. United States/'^ Plaintiff alleged that a Federal Housing 
Administration regulation, providing that a one per cent prepay- 
ment penalty would be levied on all mortgages held by that 
agency in cases where they were paid before due, was invalid 
since it was not adopted in accordance with the rulemaking re- 
quirements of section 553. The court rejected this argument be- 
cause the lending functions conferred on the FHA by the statute 
under which the regulation was promulgated were excluded from 
those requirements by the operation of section 533 (a) (2) .^* 

Although the above example was a fairly clear case, another 
illustration demonstrates the extent to which a regulation need 
only "relate to" loans made by the government to be considered 
within the subsection (a) (2) exemption. Stroud v. Benson ^'^ in- 
volved the question whether an order of the Secretary of Agricul- 
ture requiring identification of varieties of tobacco on the auc- 
tion warehouse floor was a rule subject to the procedures of 
section 553. The Secretary issued an order requiring such identi- 
fication without prior notice or public participation, on the 
grounds that it was "a matter relating to" the loan and price 



^^^ Webster's Third New International Dictionary 1326 (1966). 

«* Black's Law Dictionary 1085 (rev. 4th ed. 1968). 

*^ Reich, Rulemaking Under the Administrative Procedure Act, in Federal Administrative 
Procedure Act and the Administrative Agencies 498 (G. Warren ed. 1947). 

" Attorney General's Manual, supra note 11, at 27. 

"392 F.2d 224 (Ct. CI. 1968). 

8*/d. 227. The court cited Grymes Hill Manor Estates v. United States, 373 F.2d 920, 923 
(Ct. CI. 1967) for the same proposition. That case also held that the function of the F.H.A. 
pursuant to the statute under which the regulation was promulgated was exempted from the 
§ 553 requirements by subsection (a) (2). The opinion is not explicit as to which of the (a) (2) 
exemptions was involved, but it may be implied that the court was referring to the term "loans." 

«M55 F. Supp. 482 (E.D.N. C. 1957). 



REC. 16. APA RULEMAKING EXEMPTIONS 329 

support program for tobacco. The court affirmed the Secretary's 
judgment and justified the relationship because 

it has been found as a fact that failure to identify the discount varieties 
on the warehouse floor has and will tend to depress the tobacco market. A 
depression of the open market price below the level of the support price 
would ultimately result in the increase of government loans and conse- 
quently government loan stocks. The instant order is directly related to 
this contingency."'"' 

This case illustrates the very broad possibilities of an exemption 
couched in terms of "a matter relating to . . . public . . . loans." 

The very great variety and quantity of important government 
rulemaking activities exempted by the "loans" language from the 
requirements of section 553 can best be appreciated by enumerat- 
ing some of those programs to v^^hich it applies. The Attorney 
General's Mamml states that this exemption applies to "rules 
issued with respect to loans by such agencies as the Reconstruc- 
tion Finance Corporation, the Commodity Credit Corporation, 
and the Farm Credit Administration. It also exempts rules re- 
lating to guarantees of loans, such as are made by the Federal 
Housing Authority and the Veteran's Administration, since they 
are matters relating to public loans." *■'' Other specific rulemaking 
deemed exempt from the usual notice and public participation 
requirements of section 553 because it relates to "loans" includes 
rulemaking by: (1) the Department of Transportation involv- 
ing loans to assist financing, acquisition of, or capital improve- 
ments to, urban mass transportation systems; (2) the Small 
Business Administration involving loans to state and local de- 
velopment companies, economic opportunity loans, business loans, 
and disaster loans; (3) the Department of Health, Education 
and Welfare involving loans under the National Defense Educa- 
tion Act; (4) the Department of Agriculture relating to loans 
in the price support programs, loans for rural electric and tele- 
phone systems, loans for farm operating needs, farm ownership 
loans, and soil and water conservation loans; and (5) the De- 
partment of Housing and Urban Development relating to loans 
to finance low and moderate income housing, loans to assist re- 
habilitation of housing in urban renewal areas, and loans for 
rental housing for senior citizens. Of course, while the above 
listing includes some of the more important areas, it is in no way 
exhaustive for any one agency or all agencies. 

To get an idea in economic terms of the size, diversity, and im- 
portance of the national government's loan operations, and the 



««/(£. 490. 

"Attorney General's Manual, supra note 11, at 27. 



330 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

extent to which they are a significant factor in our economy 
and lives, consider the following data. In 1968, $57.2 billion in 
direct federal loans and $108.1 billion in guaranteed federal 
loans were outstanding.''^ The same year, $25,2 billion in new direct 
federal loans and $21.9 billion in new guaranteed federal loans 
were made.*'^ In 1968, the Bureau of the Budget projected that the 
amount of outstanding guaranteed and insured loans would in- 
crease by some $12.7 billion in 1969 and by a record $20.6 
billion in 1970.'° By the end of 1970, $190.6 billion in loans directly 
made or guaranteed by the United States will be outstanding,'^ 
Excluding foreign loans, direct loans made by the United States 
in 1966 were broken down into the following functional cate- 
gories and amounts : " 

TABLE B 
Direct Loans by the United States in 1966 

Category of Use Amount 

Agriculture $7.9 billion 

Education 3.1 billion 

Homeowners 3.0 billion 

Industry 978.2 million 

States, territories, etc. 855.8 million 

Financial institutions 1.9 million 

Other loans 675.8 million 

In important industries like housing and agriculture federal loans 
or guarantees of private loans account for an enormous part of 
the credit available for financing such activities. 

The above data make it clear that direct federal loans and 
federal guarantees of private loans play a very large and vital 
role in our national government's efforts to (1) improve housing 
and encourage homeownership, (2) develop agriculture and other 
natural resources, (3) promote business, especially exports, trans- 
portation, and small business generally, (4) redevelop communi- 
ties and regions, and (5) aid higher education."^ Consequently, 
the section 553(a)(2) exemption relating to "loans" excludes 
from the usual requirements of notice and public participation 
rulemaking having a vital and enormous impact on the public at 
large, and specifically bearing on many of the most pressing 
domestic problems facing our nation. 



*' U.S. Bureau of the Budget, Special Analysis, Budget of the United States, Fiscal 
Year 1970, at 62 [hereinafter cited as Speoal Analysis], 
«»/d. 57. 
w/d, 63, 
"/<i. 61. 

" Propekty Inventory Report 19. 
" Special Analysis 54. 



REC. Hi. APA RULEMAKING EXEMPTIONS 331 

D. Grants 

The exemption for rulemaking related to "grants" principally 
refers to a situation in which the government gives something 
to a recipient, such as money or land, to enable him to do a 
particular thing. The main thrust of the "grants" exclusion is 
tov^ard cases where the United States makes a gift of property 
on the condition that the recipient use it or its proceeds to 
achieve a specific object. As used in section 553(a)(2), "grants" 
covers all "subsidy programs" and "grants-in-aid programs under 
which the Federal Government makes payments to state and 
local governments" and private individuals and entities.'* The 
subject or object of the grant and its terms and conditions are 
irrelevant. 

The number of such grant programs is very large and their 
objects numerous, as the following diverse examples will illus- 
trate. The Department of Labor administers grants seeking to 
secure vocational rehabilitation for migrant workers, and grants 
for the administration of unemployment insurance and employ- 
ment service programs. The operation and construction of ships 
and dissemination of technological information throughout Amer- 
ican business are the subjects of grants by the Department of 
Commerce. Much highway construction results from grants made 
by the Department of Transportation. The Department of Agri- 
culture supports through grants such diverse programs as those 
involving school meals, agricultural conservation, and community 
water and sewer systems. The Department of Health, Education 
and Welfare makes various kinds of grants to aid the construc- 
tion and equipment of elementary, secondary, and other educa- 
tional institutions, as well as to support health related research, 
the construction of health related facilities, child welfare serv- 
ices, vocational rehabilitation services, and special services for 
care of the aged and mentally retarded. Among their many 
grant programs, the Department of Housing and Urban Develop- 
ment makes grants for urban renewal, the Office of Economic 
Opportunity grants to support legal services for the poor, and 
the Department of Interior grants to control water pollution. 

The enormous significance of the exemption for rulemaking 
relating to "grants" from the usual requirements of section 553 
can be further appreciated by an examination of the extent of 
our national government's grant programs. Grants-in-aid to state 
and local governments comprise the overwhelming bulk of fed- 



'* Attorney General's Manual, supra note 11, at 27-28. 



332 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

eral grants. In 1970 it is estimated that such grants to state 
and local governments will reach $24.7 billion, accounting for 
99% of total federal aid received by those entities in that year. 
Grants will then account for almost 18% of state and local rev- 
enues,"^ and an estimated 24% of federal expenditures on civilian 
domestic programs.'" 

Functionally speaking, federal grants to state and local gov- 
ernments will break down in the following way during the next 
fiscal year: agriculture and agricultural resources 4% ; natural re- 
sources 3% ; commerce and transportation 22% ; community de- 
velopment and housing 11%; education and manpower 18%; 
health and welfare 40%; and other 2%. "The cumulative effect 
of the tremendous increases in human investment grants in the 
1960-70 period will be to place the principal emphasis of federal 
aid ... on health and welfare activities — as well as give added 
impetus to education and manpower, and community develop- 
ment and housing efforts. In 1970, these programs will account 
for 69% of total estimated aid payments." The rising tide of 
federal grants activities in the areas of human investment can 
best be depicted by noting that between 1964 and 1970 annual 
federal grants for health and welfare purposes will rise some 
$6.3 billion or 168%; for education and manpower purposes by 
$3.5 billion or 364%^ ; and for community development and hous- 
ing purposes by $2.3 billion or 546%." On the basis of these facts 
it is clear that rulemaking relating to "grants" by the national 
government has an enormous and vital effect on the daily lives 
of tens of millions of Americans. 

E. Benefits 

As used in section 553(a)(2) the term "benefits" mainly refers 
to programs under which the national government makes pay- 
ments in money or kind to persons in consideration of previous 
contributions paid to, or in some cases services rendered to, 
the United States. In a few situations the payments are made 
merely because of the individual's status. Cash benefits are usually 
paid from government trust funds, and, unlike grant money, 
may normally be expended in any way and for any purpose the 
recipient desires. 

The "benefits" exclusion has a very broad scope and has been 
deemed to cover rulemaking relating to a great variety of pro- 



" Special Analysis 203. 
'« Id. 208. 
" Id. 207. 



REC. Ifi. APA RULEMAKING EXEMPTIONS 333 

g:rams. More specifically, this exemption applies to rulemakinj? 
relating to pensions, medical care, and other similar services pro- 
vided to veterans by the Veterans' Administration, and to all 
rulemaking relating to old age, survivors, disability, and health 
insurance payments made under the Social Security Act.'" The 
exclusion also covers rulemaking relating to the social insurance 
programs administered for employees of railroads by the Rail- 
road Retirement Board, the social insurance programs for fed- 
eral employees administered by the Civil Service Commission, 
and the federal-state unemployment insurance program whose 
monies are administered by the Department of Labor. Federal 
rulemaking relating to federally financed, state administered, 
federal-state assistance programs, such as Aid to Families with 
Dependent Children, may also be considered by this exemption 
as well as that for "grants." 

Federal outlays for cash benefit programs totaled $40 billion 
in 1968, an amount equivalent to about five per cent of the Gross 
National Product. Cash benefits program expenditures are ex- 
pected to reach about $49 billion in 1970. The total amount spent 
on cash benefit programs have comprised about one-fourth of 
all federal expenditures for all purposes in each year since 1961."'' 
Cash benefit programs may be categorized roughly into two 
groups — one consisting of income replacement benefit programs, 
and another of income support programs. Some $42.5 billion in 
federal outlays will be made in 1970 for income replacement 
benefit programs providing protection against loss of earnings 
due to retirement, disability, death of the breadwinner, and un- 
employment. Of this amount, about $36.5 billion will be from 
accounts funded in part by employer and /or employee contri- 
butions to which over fifty million Americans contribute. In 
1969, benefits from the above income replacement programs 
will be paid to approximately 18 million people.'^" Federal benefit 
outlays in the income support programs which base benefits 
on current needs will amount to $5.9 billion by 1970, and will 
reach almost 12.4 million recipients."^' Aid to Families with De- 



''^ See Attorney General's Manual, supra note 11, at 28. 

■' Special Analysis 174-75. Some of this money, and some of the money in the following 
figures with regard to "benefits," represents grant payments to the states for benefits pro- 
grams they will administer. Consequently those funds might better be viewed as "grants" 
rather than "benefits," even though they may result in the payment of federally financed 
benefits. However, the overwhelming bulk of the money referred to in the accompanying 
figures are benefit payments made directly by the United States. See id. 187 (HETW "Public 
Assistance" category). 

* Id. 175, 179-80 ; Statistical Abstract 476. The survivors and disability programs in this 
category will benefit some 7.8 million beneficiaries and 4.9 million beneficiaries respectively ; 
and unemployment payments will aid about 5.3 million individuals. 

" Special Analysis 182. 



334 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

pendent Children is one of the best known of these programs. 

The cash benefit programs are administered by a small group 

of governmental units as the following table will show : ^^ 

TABLE C 

Governmental Units Administering the Cash Benefit Programs 

Governmental Unit Amount 

Department of Health, Education & Welfare $33.3 billion 

Veterans' Administration 5.5 billion 

Department of Labor 2.9 billion 

Department of Defense 2.7 billion 

Civil Service Commission 2.4 billion 

Railroad Retirement Board 1.6 billion 

In addition to all of the above federal benefit programs provid- 
ing cash benefits which the recipient is free to use as he chooses, 
outlays in federal programs providing benefits in kind will be 
in excess of $5 billion by 1970,*'^ and will provide benefits for 
many millions of persons.'** It is rulemaking related to these pro- 
grams, involving billions of dollars and directly affecting tens of 
millions of Americans, that is removed from the mandatory 
notice and public participation requirement of section 553 by 
the term "benefits" in subsection (a) (2). 

F. Contracts 

The last section 533(a)(2) exemption to be considered is that 
for "public . . . contracts." The main thrust of the "contracts" 
exemption seems to be toward government procurement of real 
or personal property and services. The legislative history of the 
Act does cast some doubt as to whether "rulemaking relating 
to public . . . contracts" includes one area, vitally important to 
a great many people — that of "minimum wage determinations 
of the Department of Labor in connection with public con- 
tracts." ^^ However, in light of all the evidence and the unqualified 
sweeping language of the exemption those determinations must 



^Id. 187. 

^Id. 186. 

M/d. 185. 

^ Objections were made to an early draft version of the APA which exempted "any matter 
relating to . . . public property or contracts" on the grounds that the § 4 rulemaking pro- 
cedures "should not be applied to minimum wage determinations of the Department of Labor 
in connection with public contracts." The reaction to the criticism was to suggest that the 
exemption now found in § 553(b) (B) for situations in which the usual procedures are "im- 
practicable, unnecessary, or contrary to the public interest," "amply provide[s] for proper 
exemptions," rather than to state what otherwise would seem obvious: the term "contracts" 
completely and unqualifiedly exempted Department of Labor wage determinations from § 4. 
S. Doc. No. 248, supra note 2, at 18. 



REC. 16. APA RULEMAKING EXEMPTIONS 335 

be deemed within that exclusion."" In this connection it should 
be noted that the Attorney General's Manual unequivocally states 
that "the exemption extends to wage determinations made by the 
Labor Department under the Davis Bacon Act and the Walsh 
Healy Act, as conditions to construction and procurement con- 
tracts entered into by the Federal Government." " 

The "contracts" exemption clearly has a very wide scope. In 
addition to General Services Administration rulemaking relat- 
ing to contracts for the procurement of land, goods, and services, 
and to construction contracts of all kinds, the exemption applies, 
as do all of the other (a)(2) exemptions, to rulemaking of that 
sort by every federal agency. For instance, it extends to rule- 
making by the Treasury Department relating to the terms under 
which government securities are issued, owned and redeemed 
"since securities are government contracts." ^^ It also extends to 
regulation making for Department of Agriculture programs such 
as the Cropland Adjustment Program, Feed Grain Program, 
Cropland Conversion Program, Soil Bank Program, Wheat Di- 
version Program, Crop Insurance Program, and a number of 
Commodity Credit Corporation programs. In addition, it applies 
to such Health, Education and Welfare contracts as those to 
establish or expand law school clinical experience programs, and 
those for university research on a huge number of topics. It 
also, of course, applies to rulemaking relating to the nondiscrim- 
ination in government contracts program administered by the 
Department of Labor. 

An idea of the significance and importance of such government 
contracts, rulemaking relating to which is excluded by section 
553(a)(2) from the usual rulemaking requirements, may be 
gained from the following illustrative data. The jobs of millions 
of Americans are directly and indirectly affected by the contract- 
ing activities of the federal government. In fiscal 1969 the United 
States will purchase $20.6 billion in nondefense related goods 
and services.**'^ Outlays under contracts for direct, nondefense re- 
lated federal public works, which include the design and con- 
struction of new structures, major improvements and modifica- 



** See Attorney General's Manual 28, quoted in text accompanying note 87 infra: Reich, 
tupra note 61, at 498. Note also that the continuous practice of the Department has been to 
treat such determinations as exempt. 1969 Survey, supra note 27 (response of the Department 
of Labor) . 

"Attorney General's Manual, supra note 11, at 28 (citations omitted) (citing Perkins v. 
Lukens Steel Co., 310 U.S. 113 (1940)). 

** 1969 Survey, supra note 27 (response of the Department of the Treasury). 

*' U.S. Bureau of the Budget, Budget of the United States Governmeint, Fiscal Year 
1969. at 541. 



336 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

tions of existing structures, and in some cases site acquisition, 
will reach about $2.5 bill^'on in 1970.^" The total estimated cost 
at that time for all nonmilitary federal public works in progress, 
which includes the sum of payments to be made under contracts 
in process and contracts to be newly initiated, will amount to 
$12.5 billion.^i 

In 1967, awards were made under defense related procurement 
contracts, including contracts to obtain military supplies, services, 
or construction of all sorts, amounting to $44.6 billion. ^^ For that 
same year, it was estimated that jobs for 7.4 million workers, 
comprising about ten per cent of all employees in this country, 
was generated by Department of Defense contracts. ^^ It should 
also be noted that arrangements for the financing of the public 
debt of the United States, which the Treasury treats under the 
"contracts" exemption, covered $326 billion in 1967. This in- 
cluded $210 billion in marketable public issues.^* Rulemaking 
relating to all of the above, affecting the lives of millions of 
individuals in every part of this country, is removed by the 
"contracts" exemption from the requirements of subsections (b)- 
(e). 

G. Some Conclusions With Respect to the Scope and Practical 
Importance of Section 553(a) (2) Exemptions 

Even if they are strictly construed, which they seldom seem 
to be in practice, the section 553(a) (2) exemptions are extraor- 
dinarily broad and of very great significance. The language of 
these exemptions excludes an enormous quantity of rulemaking 
from the requirements of section 553. The classes of rulemaking 
excluded by it are also of especially great qualitative importance 
to certain segments of our society and to the public interest at 
large.^^ The rulemaking involved has a great impact on our na- 
tional effort to cure the pressing human problems of the last 
half of the twentieth century. Most rulemaking excluded from 
section 553 by subsection (a)(2) relates to programs, or func- 
tions, or techniques for governing, which have an unusually large 
impact on the daily lives of tens of millions of Americans. Efforts 
to solve our urban crisis, racial problems, poverty problems, en- 
vironmental quality difficulties, and human spirit and character 



^ Special Analysis 221-22. 

"/d. 226. 

^ Statistical Abstract 249. 

93 /d. 251. 

■^Id. 394-95. 

9'&i' Bonfield, supra note 31. at 512-20. 



REC. 16. APA RULEMAKING EXEMPTIONS 337 

maladjustments have mainly been pursued through the use of 
"public property, loans, gfrants, benefits, or contracts." 

As a result, most rulemaking attempting: to deal with the im- 
portant domestic problems facing our nation in this era has been 
conducted without any guarantee that public participation of the 
kind stipulated by section 553(b) -(e) will be allowed. As pre- 
viously noted, the rulemaking procedures actually utilized in the 
situations currently exempted by section 553(a)(2) are frequent- 
ly much less effective to secure adequate public participation 
than those found in section 553(b)-(e). The impact of this situa- 
tion on the poor, city people, the farmer, and other separable 
segments of our society is particularly detrimental. 

The exemptions under consideration here are especially unde- 
sirable because they tend to insulate almost all of the rulemaking 
of certain specific federal agencies against unwanted public 
participation. Agencies whose rulemaking is almost entirely in- 
sulated against such mandatory public involvement may, as entire 
governmental entities, completely lose touch with the public they 
are to serve, and in that situation, the public may lose any day 
to day ability to influence the operations of such agencies. Al- 
though this does not always occur, it is nevertheless a grave 
danger. 

Two points deserve reiteration. First, rulemaking of the kind 
exempted by subsection (a)(2) intimately affects millions of 
Americans in their daily lives, and is one of the most important 
and frequently used means by which our national government 
seeks to solve our pressing social, economic, and environmental 
problems. As the Senate Committee on Administrative Procedure 
stated when it recently recommended modification of section 
553(a)(2), 

[t]he importance of the Government's activity in this area is now enor- 
mous, involving, as it does, tens of billions of dollars of expenditures 
yearly and vast properties. The rules regulating this activity are conse- 
quently of vital concern to the public and it is only reasonable that it be 
informed and allowed to take part when rules relating to public prop- 
erty, loans, grants, benefits, or contracts are made."" 

Second, the exemption of rulemaking relating to "public property, 
loans, grants, benefits, or contracts" also creates a special danger 
that certain important government agencies may, as entities, 
become out of touch with and unresponsive to public needs. 
In light of these two points, and the many reasons favoring 
required opportunities for public participation in rulemaking that 



" S. 518 Hearings, supra note 30, at 379. 



338 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

were discussed in the introduction to this paper, the reasons 
assigned to justify these particular exemptions must be examined 
with extraordinarily great care. 

v. justifications advanced for the "public property, loans, 
Grants, Benefits, or Contracts" Exemptions 

Arguments advanced to justify the exemption of the so-called 
"proprietary" activities of government from usual rulemaking 
procedures range in character. Some are purely theoretical and 
historical. Others are intensely practical. But they all deserve 
careful enumeration and evaluation, for only then can it be as- 
certained whether they are adequate to justify the status quo 
in light of the competing policies which favor public participa- 
tion in rulemaking. 

The right-privilege distinction furnishes the most frequent jus- 
tification for the exemption of subsection (a) (2) rulemaking 
from the procedural requirements of section 553. The theory is 
that no member of the public has a "right" to use public property, 
receive a loan, grant, or benefit from the government, or to make 
a contract with the government. Rather, these are all "privileges," 
and if a man does not like the terms on which these privileges 
are made available to him, he can simply refuse to accept the 
privileges and thereby avoid submission to their conditions. Con- 
sequently, rulemaking relating to these subjects should be treated 
differently than rulemaking relating to other government func- 
tions. This idea has been expressed in a number of ways. 

An official objecting to the legislative imposition of certain 
procedures on his agency's activities, including rulemaking of the 
sort involved here, stated that "the parties affected [by the 
Bureau of Reclamation's activities] . . . voluntarily submit to 
regulations in order to gain certain privileges." "' The Depart- 
ment of Commerce thought that following the usual procedures 
for rulemaking involving the "proprietary functions" appeared 
to be "unduly burdensome, particularly where the subject matter 
does not involve a right of the private parties concerned, but 
rather bestowal upon them of such benefits as loans, grants, 
etc." ^^ Somewhat differently stated — so as to include the idea 
that a person may avoid complying with subsection (a) (2) rules 
promulgated in the isolation of government bureaucracy by not 
dealing with the government — is the version supplied by the 
General Services Administration a number of years ago : 



19il Hearings, supra note 17, at 689 (statement of Commissioner of Reclamation). 
' S. 16GS Hearings, supra note 30, at 311. 



REC. 16. APA RULEMAKING EXEMPTIONS 339 

The rulemaking which is presently subject to section 4 of the Administra- 
tive Procedure Act is rulemaking of the true "regulatory" type; i.e., rule- 
making that has a direct impact upon industries or the public which have 
no choice but to be regulated in the public interest. Such rulemaking af- 
fects all members of the public who engage in the regulated activity, 
whether they are dealing with the Government or with other members of 
the public, while GSA's regulations apply, in general, only to Government 
agencies and those members of the public who choose to deal with the 
Government by furnishing supplies or services, leasing space, buying 
surplus property, etc. Accordingly, since those affected may extricate 
themselves of their own volition from the impact of GSA regulations by 
not dealing with the Government, due procesp does not require such safe- 
guards as are provided in section 4 of the redraft of S. 1663 [which 
eliminates the subsection (a) (2) exemptions] for their protection." 

The "right-privilege," "avoidable conditions" argument is con- 
cerned with the relationship between the subject matter of the 
exempted category and the recipient. Another distinction, this 
one between the proprietary and nonproprietary functions of 
the Government, deals more broadly with th3 nature of the gov- 
ernmental activity involved ; yet it is often used in close 
conjunction with the "right-privilege" argument to justify the 
current subsection (a) (2) exemptions. It is argued that the 
procedures contained in section 553 should not be applied to 
rulemaking involving the subjects listed in subsection (a) (2) 
because when government exercises these functions it is acting 
in a "proprietary" capacity. ^°" Consequently, in that situation the 
Government should be treated as if it were a business or private 
person handling private money or affairs. The floor manager of 
the APA in the House argued strongly for this interpretation 
during the debate on that bill.^"' Public participation in rule- 
making relating to these kinds of situations is deemed to be un- 
necessary since if a businessman were carrying on the same 
activities, a private person would have no right to participate in 
his decision-making process.'"-' Furthermore, it has been asserted 
that "freeing functions of a proprietary nature, in order to im- 
prove the position of the Government when it is operating in an 
area and along lines similar to a business enterprise, reflects the 



"Id. 522. See id. at 427. 

i"»/rf. 494 (Department of Defense). 

'"• S. Doc. No. 248, supra note 2, at 358. 

'"-The Department of Defense has stated that "to publish or to admit the public to the 
formulation of such a policy [regarding pricing and negotiation of contracts] could only put 
the Government at serious disadvantage in the negotiation of the contracts for which the 
policy was intended. Certainly there is no comparable disclosure re<iuired of private parties to 
Government contracts, and it would be unthinkable for the Government, in its proprietary 
capacity, to participate in the formulation of the business policies and practices of the firms 
with which it deals." 1957 House Study, supra note 51, at 278. See also S. 518 Hearings, supra 
note 30. at 279 (REA). 



340 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

intentional and traditional position of the Congress in this 
connection." ^"^ 

The above arguments should not be sufficient to justify the 
current section 553(a) (2) exemptions. In the first place, the law 
is currently in the process of reevaluating the "right-privilege," 
"avoidable conditions" distinction as a ground upon which to 
base legal judgments regarding the propriety of governmental 
action."* The notion that a government agency should be free 
to deal with people in any manner the former pleases when 
"privileges" are involved — an idea which was never the product 
of common sense or sound social policy — is fast disappearing 
both in the law, and in the public mind. Secondly, because 
many people have come to depend upon such "privileges" as 
welfare benefits of various kinds, social security and veterans' 
benefits, government guaranteed home loans, federal contracts, 
and public recreation facilities, most people now consider them 
a part of their entitlement. Furthermore, these people have in- 
creasingly little choice but to accept such benefits, whether they 
be called "rights" or "privileges." Realistically, the conditions 
imposed on recipients of such grants, benefits or public contracts, 
for example, frequently cannot be avoided; in the world as 
it actually is, most people are in no position to refuse the "privi- 
lege" to which the strings are attached. 

Finally and most important, both the "right-privilege" and 
the "proprietary-nonproprietary" distinctions are meaningless in 
this context because they are not tools with which the problem 
at hand can be realistically analyzed and evaluated. Rather, they 
are screens which enable the user to avoid the hard work of 
investigating the real problem involved. To say that public partic- 
ipation is not required in rulemaking relating to "public prop- 
erty, loans, grants, benefits, or contracts" because they involve 
"privileges" or "proprietary" matters is to declare a result with- 
out giving any relevant reason for it. The fact that a certain 
construction firm has no "right" to contract with the Govern- 
ment, or that when the Government enters into such a contract 
it is acting in a "proprietary" capacity, or that the firm need 
not apply for such a "privilege" if it does not like the rules 
governing those contracts, has little to do with answering the 
question under examination. Those labels do not help a decision- 



^<" 1957 House Study, supra note 51, at 1732 (Federal Housing Administration). 

^0* See, e.g.. Reed v. Gardner, 261 F. Supp. 87 (CD. Cal. 1966); O'Neil, Unconstitutional 
Conditions: Welfare Benefits With Strings .Attached, 54 Calif. L. Rev. 443 (1966) ; Van 
Alystyne, The Defense of the Right Privilege Distinction in Constitutional Law, 81 Harv. L. Rev. 
1439 (1968). 



REC. 1(5. APA RULEMAKING EXEMPTIONS 341 

maker to decide intelligently whether application of section 553 
procedures to rulemaking involving "public property, loans, 
grants, benefits, or contracts" is in fact undesirable. That con- 
clusion can be reached only after a careful examination of the 
consequences flov^ing from an application of section 553 pro- 
cedures to such cases; and it can be justified only if the specific 
advantages of public participation in those cases are outweighed 
by the specific disadvantages that would flow from such a re- 
quirement. 

As previously noted, the sound administration of government 
demands fully informed decision-makers. Presumably we intend 
all aspects of governmental activity to be administered wisely 
including those that can be labeled "proprietary" and those that 
involve the dispensing of "privileges." Similarly, our dedication 
to responsible democratic government requires that the rule- 
making process be responsive to aff'ected citizens by allowing 
them to communicate eff'ectively their views to the relevant of- 
ficials. Here, too, we presumably want citizens to have a chance 
to protect their interests against administrative action prejudi- 
cial to them in any way, whether that prejudice stems from 
government action involving a "right" or a "privilege," or a "pro- 
prietary" or "nonproprietary" matter. If the (a) (2) exemptions 
are to persist in the face of such important competing public 
policies, it should be because of some particular undesirable con- 
sequences that might flow from their elimination and not be- 
cause an irrelevant label can be attached to the subjects they 
embrace. 

Most federal agencies making rules relating to "public prop- 
erty, loans, grants, benefits, or contracts" take the position that 
the repeal of section 553(a) (2) would somehow harm the per- 
formance of their responsibilities. The specific practical justifi- 
cations offered to support the exemptions in question vary. They 
have been gathered from various sources, including congressional 
hearings, a survey prepared for this study,^"' and a related survey 



105 "Yhe question asked in this survey was: 

From the point of view of your department or agency what disadvantages, if any, do 
you see in a statute which would eliminate the general exclusions now found in 
subsections 553 (a) ( l)-(2) and thereby make the provisions of subsections 553(b)-(e) 
applicable to all rulemaking relating to those currently excepted situations? Be as specific 
as possible, furnishing concrete, detailed examples. Overly general answers will not be 
particularly helpful. If your answer varies from program to program or from one tJTpe 
of currently excepted rulemaking to another, please specify and explain in detail. 
Despite the instructions contained in the last three sentences, most agencies responded with 
general answers and did not furnish concrete, detailed examples of how the alleged dis- 
advantages arise in practice. The failure to present specific instances may be indicative of 
the frailty of the many arguments made against modification of § 553(a) (2). 



342 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

done for the Administrative Conference of the United States in 
1968.^°« 

The most frequently articulated, practical justification for the 
subsection (a) (2) exemptions is that their elimination would 
cause a greatly increased work load resulting in both delay in 
the performance of the Government's everyday functions and 
increased costs in carrying on those functions. The spectre of 
inefficient delays arises from a sense that the bulkiness of the 
rulemaking task could cause the bureaucracy to bog down if 
the exemptions were eliminated. The General Services Adminis- 
tration has opined, for example, that "[p]ublic participation 
[through rulemaking] in the management [of] property and 
contracts would be so complicated and cumbersome as to seriously 
impede and delay the efficient and economical conduct of the 
Government business." '"" Similarly, "delay in rendering services 
and administering benefits" was the prediction of the Veterans' 
Administration if subsection (a) (2) was eliminated.^"'* The De- 
partment of Interior has asked, in this regard : 

Is the public really better served through the medium of notice of rule- 
making and publication in the Federal Register in every instance of the 
formulation of a statement of policy? What effect would such a require- 
ment have on the operations of a program agency? Do we want to take 
the chance of subjecting much of the informal policy making that we do 
today on a daily basis to the potential of interminable delays? Can our 
programs afford these delays? Even more importantly, will Congress and 
the public tolerate these delays? We firmly believe that the answer to all 
of these questions, when carefully analyzed, must be "no"! '"" 

On the issue of increased operating costs, the Farmers Home 
Administration has reported, for example, that elimination of 
these exceptions "would cause a tremendous increase in the vol- 
ume of work and operating costs" of that agency. ^'^ Even an 
agency seemingly unopposed to the modification of this exemp- 



106 The auestion asked in 1968 was: 

What disadvantages, if any, do you see in a statute which would eliminate the exclusions 
now in 5 U.S.C. 553(a) as they may apply to . . . [your programs with a substantial 
impact on the poor], and thereby would make the provisions of 5 U.S.C. 553(b)-553 (e) 
applicable to all rulemaking relating to those programs? (Assume that the several 
exceptions now in sections 553(b) through (e) would remain unchanged.) 
Bonfield, supra note 31, at 548. 

'"MOS? House Study, supra note 51, at 1579. 

>»8 1969 Survey, supra note 27. See also similar comments by the same agency in 1957 House 
Study, supra note 51, at 2060 and S. 1663 Hearings, supra note 30, at 463. 
"•» S. 518 Hearings, supra note 30, at 42. 

""1969 Survey, supra note 27 (response of FHA, Department of Agriculture). See also id. 
(responses of Forest Service and Soil Conservation Service, Department of Agriculture; 
Atomic Energy Commission (attachment to response) ; Veterans' Administration) ; S. 1663 
Hearings, supra note 30, at 144, 427 (Department of Agriculture and General Services Ad- 
ministration). 



REC. 16. APA RULEMAKING EXEMPTIONS 343 

tion has noted that such a change "would, of course, substan- 
tially increase the cost of government." ''• 

Elimination of the present exemptions is also deemed unde- 
sirable because it would cause adherence to the procedures of 
section 553(b) -(e) in many cases where the public has little 
interest in the rulemaking/^- or is unlikely to make a significant 
contribution to it.^'' It is alleged that frequently a rule being 
considered in relation to one of the exempted subjects "is so 
limited in its application or so minimal in its public impact that 
. . . any solicitation of comment from the public would be com- 
pletely unjustified." ^^* 

Furthermore, if rulemaking relating to "public property, loans, 
grants, benefits, or contracts" is subjected to the requirements 
of section 553(b) -(e), it is feared that the agencies involved 
in such rulemaking, and those members of the public most di- 
rectly affected, would be placed in an adversary position, thereby 
discouraging mutual cooperation toward finding the best solu- 
tion to common problems. The Tennessee Valley Authority has 
stated, for example, that their operations would be likely to be 
disrupted by such a polarization. ^^^ 

The agencies also feared that repeal of subsection (a)(2) would 
remove desirable flexibility in such rulemaking. The Atomic En- 
ergy Commission complained in this regard, as an illustration, 
that if that agency's rulemaking relating to contracts had to com- 
ply with section 553, it would "lessen the Commission's flexibility 
in dealing with the many different kinds of contracting situations 
which arise." ^^'^ A similar argument is that elimination of these 
exemptions would discourage agencies from making worthwhile 



"' Bonfield, supra note 31, at 549 & n.47 (Department of Labor). 

"^ See 1957 House Study, supra note 51, at 551 (Department of Interior, Fish and Wildlife 
Service) . 

'"See S. 1663 Hearings, supra note 30, at 177 G (Department of Treasury) : 1969 Survey, 
supra note 27 (response of Small Business Administration). 

"*S. 1663 Hearings, supra note 30, at 427 (General Services Administration). On another 
occasion a representative of the G.S.A. stated that "public advance notice in the Federal 
Register and public participation in the formulation of these rules is too much, costs too 
much, takes too much time, for many rules that would not warrant that type of effort." 
Transcript of the ABA Symposium on S. 1336, Washington, D.C. (Dec. 1, 1966) 109. 

"* TVA said that procedures similar to those in what is now § 553 "would place TVA and 
its distributors in an adversary position where the tendency would be for each distributor 
to try to gain an advantage in the formulation of the policy rather than working with TVA 
and other distributors in a mutual effort to find the best possible solution to each problem as 
it arises." S. 1663 Hearings, supra note 30, at 544. The agency gave a similar response in 
1968. See Bonfield. supra note 31, at 549 n.49. See also 1957 House Study, supra note 51, at 
374 (Office of Education, Department of Health, Education and Welfare). 

'"S. 518 Hearings, supra note 30, at 119. See also S. 1663 Hearings, supra note 30, at 544, 
stating that "a large measure of the success of T.V.A. . . . attained during the past 31 years 
has been due to its ability to maintain flexibility in its operations. The proposed revisior 
[elimination of § 553(a)(2)] would take away this flexibility."; 1957 House Study, supra 
note 51, at 2060 (Veterans' Administration) : Bonfield, supra note 31, at 548 n.45. 



344 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

changes in rules because of the more formal and particularized 
procedures that would be required. The House and Senate Reports 
on the APA noted that "[tlhe exception of proprietary matters 
[in section 4] is included because the principal considerations in 
most such cases relate to mechanics and interpretations of policy, 
and it is deemed wise to encourage and facilitate the issuance of 
rules [on these excluded subjects] by dispensing with all manda- 
tory procedural requirements." "^ 

Section 553(a)(2) is also said to be justified on the grounds 
that without it, there would be uncertainty in some cases whether 
public rulemaking procedures must be followed, thus causing 
litigation or encouraging the use of those procedures in situations 
where they would be unwise. The Department of Defense re- 
ported, for example, that the primary disadvantage to that 
agency of eliminating the broad exclusions in section 553 was 
"uncertainty," because the extent to which their rulemaking fits 
under the more limited exemptions found within section 553(b)- 
(e) was unclear. This "leads the Department of Defense to fear 
a rash of litigation testing . . . [its] interpretation of these 
. . . [other exemptions]." "^ 

The current exemptions are alleged to be necessary for an- 
other reason. In some cases, section 553 procedures are said to 
be an insufficient means by which to assure that the relevant 
people participate adequately in rulemaking relating to the ex- 
empted subjects. Requiring adherence to those procedures in 
the subsection (a)(2) situations might, therefore, sometimes 
force an agency to follow two sets of procedures in order to in- 
volve properly the right people. The Office of Economic Op- 
portunity has noted, for instance, that the procedures prescribed 
in section 553 "would generally prove ineffective in reaching the 
poor," and that they would have to be supplemented by other, 
more effective procedures currently being used by OEO."** 

The diflficulty with all of the previous general justifications for 
the current section 553(a)(2) exclusions is that they do not 
distinguish rulemaking relating to these exempted categories as 
a class from rulemaking already subjected to the requirements 
of section 553(b)-(e). Every one of the arguments just outlined 
could also be made with respect to those classes of rulemaking 
already subjected to the usual rulemaking procedures. The com- 



J"S. Doc. No. 248. supra note 2, at 199, 247. 

1" 1969 Survey, supra note 27 (response of Department of Defense). See also id. (response 
of REA, Department of Agriculture) . 

"» Bonfield, supra note 31, at 549 n.48. See also 1969 Survey, supra note 27 (response of the 
Office of Economic Opportunity) ; S. 166S Hearings, supra note 30, at 325 (Department of 
Health, Education and Welfare). 



REC. 16. APA RULEMAKING EXEMPTIONS 345 

plaint that increased cost, work load, general delay, duplication, 
and the like will result if the currently excepted rulemaking is 
required to follow section 553(b)-(e) could, for example, also be 
made with respect to the run-of-the-mill regulatory rulemaking 
which we have already decided should be subjected to those pro- 
visions. The argument that required adherence to usual rule- 
making procedures in these cases will reduce needed flexibility, 
cause uncertainty and litigation, be a waste in many cases, and 
discourage needed changes in rules, could also undoubtedly be 
used to support the exemption of all the currently included rule- 
making. If it was worth risking some of these possible conse- 
quences to bring that rulemaking within the procedures con- 
tained in the statute, it is also worth risking them to bring 
the rulemaking under discussion here within those requirements. 
There is no evidence to support the general assertion that the 
deleterious consequences flowing from the inclusion of subsection 
(a)(2) rulemaking within the provisions of section 553 are 
greater than the similar consequences resulting from the ap- 
plication of that provision to the rulemaking already subject to 
its terms. Furthermore, experience with the section 553 proce- 
dures as applied to other kinds of rulemaking also suggests that 
these consequences are not likely to be as frequent, great, or detri- 
mental in the mass of subsection (a)(2) situations as advocates 
of this exemption claim. 

However, agencies do encounter specific situations involving 
subsection (a)(2) rulemaking in which a requirement that they 
provide advance notice and an opportunity to participate would 
be unreasonable. For instance, although the Department of Labor 
does not argue that there are any disadvantages in the elimina- 
tion of section 553(a)(2) as it applies to rulemaking of general 
application, it takes a different view with respect to certain rule- 
making situations of particular application. 

[T]he Davis-Bacon Act and some 45 related acts for Federal and Fed- 
erally-assisted construction contracts . . . provide that the specifications 
for all such contracts shall require the contractor to pay to his laborers 
and mechanics at least the prevailing wage as determined by the Sec- 
retary of Labor. The determinations are made by the Secretary at the 
request of the contracting agency before the bids are let. 

. . . [The vast sums spent on Federal and Federally-assisted con- 
struction] are influenced not only by the level of the wages, but also by 
procedures which delay commencement of the contract. The aphorism 
that time means money is particularly pertinent here. 

. . . [A]t present the Department of Labor issues almost 26,000 pre- 
vailing wage determinations annually, averaging about 25 separate 
classifications of laborers and mechanics. Each classification may in- 



346 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

elude up to six separate findings as to cash wages and fringe benefits pay- 
ments. The Department receives about 45,000 pieces of correspondence 
annually in connection with the issuance of these wage determinations 
[which constitute rulemaking within the definition of § 551 (4)]. 

Application of the formal rule-making requirements of section 4 
would require some 500 to 600 notices of proposed rulemaking to be pub- 
lished each week in the Federal Register. Interested persons would have 
an opportunity ... [to participate in each case]. The processing of the 
submitted data, views, and arguments could result in obvious delays 
and additional personnel and other costs."" 

On this basis the Department of Labor has concluded that 
"there are considerable disadvantages and no corresponding- ad- 
vantages in the elimination of the exemptions in section 553(a) 
(l)-('2) as thev apply to wage determinations under the Davis- 
Bacon Act and its related acts and the Service Contract Act." ^^i 
In this situation, it is clear that the unusually large costs which 
would be imposed on the Government by required adherence to 
normal rulemaking procedures far outweigh the benefits of public 
participation. These costs include not only the direct monetary 
cost of administering such procedures in this unusual situation 
but also the likelihood of substantial, deleterious consequences to 
the Government's construction program. Arguments based on 
the sheer magnitude of rulemaking necessary in a particular sit- 
uation have also been made by a number of other agencies/^^ 



"• S. 518 Hearings, supra note 30, at 239-40. See also 1969 Survey, supra note 27 (response 
of the Department of Labor.) The following additional reasons are offered for exempting wage 
determinations from § 553 rulemaking procedures: 

1. Prospective bidders and interested labor organizations receive actual notice either 
by means of direct distribution by this Department, distribution by a parent organization, 
or examination of the advertisement for bids. The constructive notice which would be 
given by means of the Federal Register is not necessary. 

2. Since the wage determination process is in essence a continuing one, interested 
persons have an open-ended opportunity to submit written data, views, or arguments 
about prevailing wage practices in a locality. An opportunity to submit such information 
in the case of any one determination therefore becomes almost meaningless. 

3. The issued wage determination is, in effect, tentative until there is no longer a 
reasonable opportunity to notify bidders of substantive changes in its terms. Under 
these circumstances, a separate notice of rulemaking is meaningless. 

4. There is no need for any delay in effective date of the wage determination. The 
purpose of a delay in effective date is to permit persons affected thereby to adjust to 
its terms. The bid submitted by a contractor repesents such an adjustment : 

S. 518 Hearings, supra note 30, at 241. 

"* 1969 Survey, supra note 27. 

"^ The 1969 survey response of the Department of Agriculture's Forest Service indicates that 
compliance with §§ 553(b)-(e) would retiuire it to publish in the Federal Register "70 percent 
of the Forest Service Manual and Handbook, presently consisting of approximately 30,000 pages 
with changes averaging 5,800 annually." An attachment to the 1969 Survey response of the 
Atomic Energy Commission indicates that "at present, A. E.G. Procurement Regulations consist 
of approximately 860 pages and retiuire modification about 40 times a year. Other A. E.G. man- 
uals and handbooks relating to contracts and property consist of approximately 1,000 pages 
and are supplemented and revised about 50 times a year." See also S. 518 Hearings, supra 
note 30, at 70 (Department of Defense). It should be noted, however, that much of the above 
would be excluded from the usual rulemaking requirements of § 553 because they are "inter- 



REC. 16. APA RULEMAKING EXEMPTIONS 347 

but few of them are as convincing or as extraordinary as that 
noted above. 

Similarly, there is no doubt that repeal of the (a)(2) exemp- 
tions must not interfere with the ability of agencies to react 
quickly in emergency situations, or in other situations where the 
proper performance of their functions requires rapid action. For 
example, there are many situations in which the Department of 
Agriculture cannot give advance notice of, or allow prior public 
participation in, its rulemaking relating to the wheat acreage 
allotment or crop insurance programs. The Department must 
frequently make changes in the regulations relating to those 
programs on an emergency basis, "because of a flood, other un- 
usual weather, plant disease or something similar. In such cases 
[it needs] to change the regulation and make it effective at once 
without giving notice or delaying the effective date." '^^ Similarly, 
agencies like the Department of Treasury and the Federal Re- 
serve Board cannot perform their intended functions properly 
unless they can respond instantaneously, when necessary, to a 
changed economic situation by promulgating rules "related to 
the implementation of effective monetary or fiscal policy." ^^* 
Rules imposing immediately needed safety requirements furnish 
another example. 

There are also specific occasions involving subsection (a)(2) 
rulemaking in which advance public procedures of the type listed 
in section 553 may cause the very evil that the proposed rules 
are designed to avoid. This is so, for example, in the situations 
just referred to relating to the implementation of an effective 
monetary or fiscal policy. Advance notice in such cases may un- 
settle the money and credit markets, present opportunities for 
deleterious speculative activities, and "could have generally dis- 
ruptive effects on financial markets and financial institutions." ^" 
Another case involving an exempted subject in which adherence 
to usual rulemaking procedures would have caused the very evil 
the contemplated rule sought to avoid occurred in 1960 when the 
Secretary of the Interior declared a moratorium on the accept- 
ance of applications with respect to the public lands. The reason 
for the moratorium was that a very large backlog of such ap- 
plications had accumulated while many new ones were continu- 
ously being filed. The Department pointed out that requiring 



pretative rules" or "general statements of policy" as opposed to "substantive rules" or 
"legislative rules." See 5 U.S.C. §§ 553(b) (A), (d)(2) (Supp. IV, 1969). 

"'1969 Survey, supra note 27 (response of Production Stabilization Division, Department 
of Agriculture) . 

^* S. 518 Hearings, supra note 30, at 51, 64-65, 395. 398, 400. 

"' Id. 395, 398, 400. 



348 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

"publication in the Federal Register of a proposed moratorium 
would have invited a deluge of applications," making the situation 
much worse than it already was.^-*' 

In addition to the above, there is another class of situations 
involving subsection (a)(2) rulemaking in which adherence to 
the usual procedures involving advance notice and an opportunity 
to participate may be deemed unreasonable. A situation occasion- 
ally arises in which the rulemaking in question is so insignificant 
or minor in nature and impact that utilization of these proce- 
dures may be a complete and predictable waste. A rule requiring 
persons receiving federal loans or grants to sign the loan or grant 
instrument in ink or ball point rather than in pencil or crayon 
surely does not require public participation — nor, of course, do 
purely technical amendments to an existing rule. Similarly, if all 
of the information relating to the form and desirability of a given 
rule is necessarily within the exclusive possession of the national 
government because, for example, that information is a military 
secret or otherwise privileged from disclosure, advance notice 
and an opportunity to participate would be useless and a pre- 
dictable waste. 

The above discussion demonstrates that in certain types of 
cases involving rulemaking relating to "public property, loans, 
grants, benefits, or contracts," adherence to usual rulemaking 
procedures would be unreasonable. There are specific situations 
where the policies favoring public participation in rulemaking 
are outweighed by the conflicting need to operate the Government 
efficiently, expeditiously, effectively, and inexpensively. These sit- 
uations, however, are a minority and break down into a number 
of well-defined classes which can be dealt with individually. They 
do not, therefore, constitute adequate justifications for the ex- 
emption of all rulemaking activity relating to the excepted sub- 
jects; rather, they only suggest that suitable, narrowly-drawn 
exceptions be provided for these atypical cases and situations. ^-^ 

Finally, an interesting special argument has been made to 
justify the "contracts" exception. It has been argued that the 
"contracts" exemption should be retained in the current form 
because : 



^^Id. 43. 

'2' This was recognized, for example, in the 1969 Survey response of the Department of 
Agriculture's Production Stabilization Division. The response stated that the Division would 
be disadvantaged if § 553(a) (2) was eliminated because that action might make it difficult to 
deal with emergency situations. But the response went on to note: "It is true, of course, that 
notice and effective dates can be waived for cause, but an exemption, we feel, would be prefer- 
able to waivers." 



REC. Ifi. APA RULEMAKING EXEMPTIONS 349 

[I]t is more appropriate to make procedural improvements in this highly 
specialized field by amendments to title 41 [which deals in detail with 
public contracts]. The great advantage of the Administrative Procedure 
Act is that it can cut across a lot of statutes and give general rules for 
a lot of agencies where you could never catch up if you were dealing with 
every agency directly. But where you have one title that already sets 
forth very specialized procedures, if those are not proving adequate, 
then it seems to us that the way to correct them is to amend that title.'" 

This argument flies in the face of the intended function of the 
APA which is to achieve as much uniformity in federal admin- 
istrative procedure as is reasonably possible through the use of a 
single comprehensive code on that subject.^--' If it is reasonably 
possible to obtain such uniformity with respect to the procedural 
requirements relating to most rulemaking, including that re- 
lating to contracts, an effort should be made to do so by amending 
the APA. 

Moreover, the above special argument supporting the "con- 
tracts" exemption may be used merely to defer action which 
would modify the present procedures utilized in rulemaking re- 
lating to public contracts. In fact, it is probably not of great 
consequence whether rulemaking relating to contracts is sub- 
jected to the requirements of section 553(b)-(e) directly, or in- 
directly by adding those same provisions to title 41. But the 
implicit suggestion in the above special argument for a section 
553 contracts exemption is that contracts rulemaking should not 
be subjected to the exact same kind of requirements as section 
553(b)-(e) imposes. That is really why the subsection (a)(2) 
exemption for contracts should be retained, and any modifications 
of rulemaking procedure in such cases be worked, if at all, under 
title 41. 

However, the evidence uncovered in this study does not support 
the need for a blanket and unqualified exemption from section 
553 for all rulemaking relating to public contracts, or, for that 
matter, for all rulemaking relating to any of the other subjects 
listed in section 553(a)(2). As subsequent discussion will dem- 
onstrate, a more narrowly tailored exemption can be devised to 
deal with the exceptional cases of section 553(a)(2) rulemaking 
that need special treatment. Consequently, no persuasive reason 
appears to justify a continuation of the present unqualified and 
across-the-board exemption for rulemaking relating to "public 
property, loans, grants, benefits, or contracts." 



"' S. 518 Hearings, supra note 30, at 334. 
"' See sources cited note 40 supra. 



350 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

VI. Previous Proposals to Modify Section 553(a) (2) 

In almost every session of Congress during this decade one or 
more bills have been introduced to reform federal administrative 
procedure. The most important bills attempting this were S. 2335, 
S. 1663, and S. 1663 (subcommittee revision) of the Eighty- 
eighth Congress, and S. 518, S. 2770, and S. 2771 of the Ninetieth 
Congress. All of these bills have one thing in common concerning 
the present exceptive language of section 553(a)(2); they elim- 
inated the unqualified exclusion from section 553 for rulemaking 
relating to "public property, loans, grants, benefits, or contracts." 
In its place, they substituted varying kinds of specific and gen- 
eral exemptions to deal with the problems that might arise from 
that action. 

Before outlining the ways in which these various proposals 
have sought to resolve the problem under consideration, an intro- 
ductory caveat should be stated. In their general definitional 
section, every one of the above bills defined "rule" as "the whole 
or any part of any agency statement of general applicability 
and future effect designed to implement, interpret or prescribe 
law or policy. . . ." • ■" The words "or particular" which appear 
after the word "general" in the current section 551 definition of 
"rule" were purposefully deleted. Rulemaking of "particular ap- 
plicability" was treated by these statutes as adjudication and, as 
such, was governed by those provisions of the various acts."^ 
This difference between the presently effective usage of the term 
"rule," and the more restricted version just described, makes 
comparisons between the present statute and these proposals 
somewhat awkward and misleading. That fact should be kept in 
mind during the following discussion. 

The bill sponsored by the American Bar Association, desig- 
nated as S. 2335,^^- inserted a qualified exemption in place of the 
presently unqualified one for rulemaking relating to subsection 
(a)(2) functions. It stated that "notice of or public participation 
in rulemaking" would not be required with respect to rulemaking 
"relating to public property, loans, grants, benefits, or contracts 
to the extent that the agency finds and publishes, with a statement 
of supporting reasons, that such public participation would oc- 
casion delay or expense disproportionate to the public interest." ^^^ 



"«S. 2771. 90th Cong., 1st Sess. § 551(4) (1967) ; S. 2770, 90th Cong., 1st Sess. § 551(5) 
(1967) ; S. 518, 90th Cong., 1st Sess. § 2(c) (1967) ; S. 2335, 88th Cong., § 1001(c) (1964) ; 
Revised S. 1663, 88th Cong., 2d Sess. § 2(c) (1964) ; S. 1663 88th Cong., 1st Sess. § 2(c) (1963). 

"^ See. e.g., S. Rep. No. 1234, 89th Cong., 2d Sess. 8-9 (1966). This report accompanied 
S. 1336 which was virtually the same as S. 518, 90th Cong., 1st Sess. (1967). 

"2 88th Cong., 2d Sess. (1964). See S. 1663 Hearings, supra note 30, at 32. 

"'S. 2335, 88th Cong., 2d Sess. § 1003(f) (2) (1964). 



REC. 16. APA RULEMAKING EXEMPTIONS 351 

Where an agency could not make such a finding, it could still 
utilize a generally applicable exemptive provision to adopt tem- 
porary rules relating to those subjects without giving any prior 
notice or chance for public participation. That provision applied 
"where an agency finds that (1) immediate adoption of the rule 
is imperatively necessary for the preservation of the public health, 
safety, or welfare, or (2) compliance with the requirements of 
this section would be contrary to the public interest." These 
findings, and a statement of the reasons for them, had to be 
published with the rule, which could not be valid for more than 
six months unless it was extended in compliance with the usual 
notice and opportunity to participate requirements of section 
553.'" And finally, in no case did the ABA bill remove the right 
of interested persons to petition for the issuance, amendment, or 
repeal of a rule, and the agencies' obligations in respect thereto. 

S. 1663''' substituted for the present section 553(a)(2) ex- 
emptions a slightly different kind of qualified provision than that 
used by the ABA bill. In those cases where "notice and public 
participation would be unwarranted or contrary to the public 
interest," rulemaking relating to "public property, loans, grants, 
benefits, or contracts" was specifically excluded from every pro- 
vision of section 553, including the right to petition. ^^""^ There was 
no requirement that the agency publish such a finding or the 
reasons for it with the rule so issued. Rulemaking relating to the 
subjects under consideration here could also be excluded from 
the notice and opportunity to participate provisions of section 
553 under a generally applicable emergency exclusionary pro- 
vision if the public interest demanded it. The bill stated that in 
any case where an agency finds, and publishes the finding and 
the reasons for it with the rule issued, "that adoption of the rule 
without notice is necessary in the public interest," it may do so. 
However, in such situations the emergency rule could not be ef- 
fective for more than six months, and could be renewed only 
by commencement of a rulemaking proceeding following usual 
procedures.^*' 

The Senate Subcommittee on Administrative Practice and Pro- 
cedure brought out a revised version of S. 1663 ^^^ which com- 
pletely abandoned the specific qualified exemption for "public 
property, loans, grants, benefits, or contracts" found in the 



"*Id. § 1003(d). 

■"88th Cong., 1st Sess. (1963). See S. 1663 Hearings, supra note 30, at 21. 

"«S. 1663, 88th Cong., 1st Sess. § 4 (1963). 

"'Id. § 4(b). 

"sgSth Cong., 2d Sess. (1964. See 1663 Hearings, supra note 30, at 1. 



352 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

original version of the bill. Revised S. 1663 contained no exception 
of any kind for rulemaking relating to these subjects as such. 
The modified bill did, however, continue in almost identical terms, 
and under almost the exact same limits as the original, the gen- 
eral emergency exemption from the notice and public participa- 
tion provisions for all rulemaking that needed such treatment 
because it was "necessary in the public interest." The revision 
also added an additional general exemption to the notice pro- 
vision for "minor revisions and refinements of rules." "^ 

The rulemaking section of S. 518 of the Ninetieth Congress ^*° 
was almost identical to the rulemaking section of S. 1336 of the 
Eighty-ninth Congress, which passed the Senate in 1966."^ In 
neither bill did the rulemaking section mention "public property, 
loans, grants, benefits, or contracts" as such. This meant that 
rulemaking involving those subjects was governed by the proce- 
dures usually required, unless in some particular case it came 
within one of the express general exclusions added to section 553 
in place of the section 553(a)(2) exclusions which had been 
deleted. The newly added exclusions in S. 518 exempted from 
every provision of the rulemaking section, including the right to 
petition subsection, "minor exceptions from, revisions of, or re- 
finements of, rules which do not affect protected substantive 
rights," and "rulemaking that relates solely to the establishment 
or revision of monetary rates or policy." "- Additionally, S. 518 
continued in very similar form the generally applicable emer- 
gency rules exemption found in both S. 1663 and revised S. 1663.^*^ 

As a result of hearings held on S. 518 two modifications of that 
bill were proposed. The first of these was S. 2770,'** which was 
similar to S. 518 in every respect relevant to the discussion here, 
except that it added an additional exemption to help compensate 
for the elimination of the subsection (a) (2) exclusions under 
consideration. The added exemption relieved "rulemaking that 
relates solely to . . . wage determinations" ^*-' from every pro- 
vision of the rulemaking section, including the right to petition 
subsection. 



139 Revised S. 1663, 88th Cong., 2d Sess. § 4(b) (1964). A permanent exemption, not relevant 
to this discussion, was also provided for rules relating to foreign affairs and national defense 
or to internal management or personnel of an agency. Id. § 4. 

"ogoth Cong., 1st Sess. (1967). See S. 518 Hearings, supra note 30, at 2. 

"'S. 1336, 89th Cong., 2d Sess. (1966) See S. 518 Hearings, supra note 30, at 1. The only 
relevant difference in the rulemaking that relates solely to the establishment or revision of 
monetary rates or policy" [§4(h)(6)] to the other exemptions from §4 already contained 
in S. 1336. 

i« S. 518, 90th Cong., 1st Session §4(h) (1967). 

i"/d. § 4(d). 

>"90th Cong., 1st Sess. (1967). 

"5S. 2770, 90th Cong., 1st Sess. § 553 (h) (6) (B) (1967). 



REC. l(i. APA RULEMAKING EXEMPTIONS 353 

The second modification of S. 518 introduced a number of 
sharp changes from the original. S. 2771 '"• contained all of the 
exemptions found in S. 518 discussed previously except that re- 
lating to minor exceptions or revisions. In addition, it completely 
and unqualifiedly excluded from every part of the rulemaking 
section "rulemaking that relates to public contracts." "^ In so 
doing, it treated "contracts" difi'erently than "public property, 
loans, grants [and] benefits," which were nowhere referred to 
in the Act as such. This bill also contained two generally ap- 
plicable exemptions not present in S. 518. It completely excluded 
from every requirement of section 553, including the right to 
petition, "rulemaking that relates solely to the establishment or 
revision of monetary rates, monetary policy, or other matters, 
with respect to which notice of proposed rulemaking would seri- 
ously impair the effectiveness of the rule." ^*^ It also exempted 
from every requirement of section 553 "situations in which the 
agency finds (and incorporates in the finding a brief statement 
of the reasons therefor in the rules issued) that notice and public 
procedures thereon are impracticable, unnecessary, or contrary 
to the public interest." ^'-^ 

Prior discussion presents only the general outlines of the most 
important previous efforts to alter section 553(a)(2). It demon- 
strates that much consideration has been given to the elimination 
or modification of these exemptions and that there is substantial 
agreement that some change with respect to the subsection (a) 
(2) exclusions is necessary. Most of the above proposals, however, 
do not present as desirable a solution for the problem at hand 
as that to be discussed in the next section. There are not narrowly 
enough tailored to secure the best accommodation of the com- 
peting interests involved. Almost all of the prior bills seek to 
deal with problems arising from the repeal of subsection (a)(2) 
through the use of new exemptive language, most of which is not 
demonstrably superior to existing language of section 553 that 
could be used as eflficiently for the same purpose. Consider the 
following illustrations. 

As noted earlier, the continued exclusion of all rulemaking re- 
lating to contracts, which is a feature of S. 2771, seems un- 
warranted. Similarly, the express exclusions for "all rulemaking 
that relates solely to the establishment or revision of monetary 



'*«90th Cong., 1st Sess. (1967) 

"'S. 2771. 90th Cong., 1st Sess. § 553(h) (5) (1967). 

"^ Id. § 553(h)(6). The language commencing with "or other matters" is not present 
in S. 518. 

"»/d. § 553(h) (4). 



354 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

rates or policy" as found in S. 518 and S. 2771 may also be over- 
broad as a rational accommodation of the interests involved. 
Some rulemaking within this definition might not need to be 
excluded from the ordinary rulemaking procedures of section 553. 
For instance, setting the discount rate for banks needs to be 
done w^ithout prior public notice. But a proposed rule limiting 
the rate of interest that may be paid by member banks of the 
Federal Reserve System on time or savings deposits to no more 
than "the applicable maximum rate authorized by law to be paid 
upon such deposits bv State banks or trust companies organized 
under the laws of the State in which such member bank is lo- 
cated," "° may not need to be exempted from usual rulemaking 
requirements — even though such a rule may "relate solely to the 
establishment or revision of monetary rates or policy." The ex- 
emption for rulemaking that "relates solely to . . . wage deter- 
minations" found in S. 2770 may also be overbroad. It not only 
exempts such rulemaking in an unusual situation like that faced 
by the Department of Labor, but in all situations, regardless of 
the particular circumstances of the case. Moreover, it not only 
exempts the wage determinations themselves, but also all rule- 
making that "relates solely to" those determinations. 

New exemptive language whose function can as easily and ef- 
ficiently be performed by existing section 553 exclusionary ter- 
minology is also plentiful in the above bills. It was inserted to cure 
the problems resulting from their elimination of present sub- 
section (a)(2). For example, S. 2335 exempts rulemaking where 
"such public participation would occasion delay or expense dis- 
proportionate to the public interest;" S. 1663 exempts rulemaking 
from usual procedures when they are "unwarranted or contrary 
to the public interest;" revised S. 1663 exempts all "minor re- 
visions and refinements of rules;" S. 518 enlarges that to an ex- 
emption for all "minor revisions and refinements of rules which 
do not affect substantive rights;" and S. 2771 exempts from usual 
requirements "matters with respect to which notice of proposed 
rulemaking would seriously impair effectiveness of a rule." Sub- 
sequent discussion should demonstrate that the problems sought 
to be solved by inserting the above new language as a substitute 
for the subsection (a)(2) exclusions can easily, and perhaps more 
satisfactorily, be cured by other exemptive terminology already 
contained in section 553. 



>«»12 C.F.R. § 217.3(c)(2) (1969). See also. e.g.. id. § 217.2 (prohibiting the payment of 
interest on demand deposits and defininR interest for these purposes). 



REC. 16. APA RULEMAKING EXEMPTIONS 355 

VII. A Solution: Section 553(b) (B) and Section 553(d)(3) 

According- to section 553(b) (B) the provisions of section 
553(b)-(c) are inapplicable "when the agency for good cause 
finds (and incorporates the finding and a brief statement of 
reasons therefor in the rules issued) that notice and public pro- 
cedure thereon are impracticable, unnecessary, or contrary to the 
public interest." This qualified and limited exemption from two 
subsections of section 553 deserves careful examination because 
it may be a satisfactory substitute for the overbroad, unqualified 
exemptions presently contained in subsection (a) (2). 

The exemption found in section 553(b) (B) is narrowly tailored 
because it requires an administrative assessment of the partic- 
ular facts and circumstances surrounding each case of rulemaking 
to which it is sought to be applied. The reports of the Senate 
and House committees responsible for the APA clearly stated 
that 

[t]he exemption of situations of emergency or necessity is not an "escape 
clause" in the sense that any agency has discretion to disregard its terms 
or the facts. A true and supported or supportable finding of necessity or 
emergency must be made and published."' 

By this, committees intended to establish a restrictive meaning 
of the terms "when the agency for good cause finds" which pre- 
cede the enumeration of grounds upon which this particular ex- 
emption is available. 

Therefore, the agencies are required under this provision to 
make specific findings, meeting what has been interpreted to be 
a strict standard, before they can avail themselves of the ex- 
emption. Some commentators have argued that the courts should 
not examine the accuracy of the required administrative finding 
when the validity of an agency's use of this exemption arises in 
litigation.^'- However, this finding is judicially reviewable on the 
same basis as any other finding committed to an agency's judg- 
ment.!'^ Thus, if the finding is "arbitrary, capricious, an abuse of 
discretion or otherwise not in accordance with law" or is "un- 
supported by substantial evidence" based on the whole record, it 
will be set aside and the rule promulgated rendered invalid. !=■• 



"' S. Doc. No. 248, supra note 2, at 200, 2nS. See also id. 358 (remarks of Rep. Walter). 

'"See R. Parker, Administrative Law 182-83 (1952) ; Nathanson, Some Comments on the 
Administrative Procedure Act. 41 III. L. Rev. 368, 384-85 (1946). 

'"See Texaco. Inc. v. FPC, 412 F.2d 740 (3d Cir. 1969) ; Durkin v. Wagner Co., 115 F. Supp. 
118 ( E.D.N. Y. 1953) aff'd per curiam sub nom. Mitchell v. Wagner Co., 217 F.2d 303 (2d 
Cir. 1954), cert, denied, 348 U.S. 964 (1955). See also National Motor Freight Traffic Ass'n. 
Inc. V. United States, 268 F. Supp. 90 (D.D.C. 1967). In this last case, it is not clear 
whether § 553(b) (B) or § 553(B) (A) was involved. 

'^5 U.S.C. §§ 706(2) (A), (2) (E) (Supp. IV, 1969). See aUo cases cited note 153 supra. 



356 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

Of course, in such cases the presumption of validity will rest, as 
it always does, with the administrative action, the burden of 
overturning it resting upon the assailant. 

There is one interpretation of section 553(b) (B) which should 
be rejected at the outset. It can be argued that an agency seeking 
to come within the section 553(b) (B) exemption must find that 
it is "impracticable, unnecessary, or contrary to the public in- 
terest" for the agency to follow the procedures of subsection (b) 
in each separate rulemaking case to which it seeks to apply the 
exemption, and that it cannot make that finding wholesale as 
to any narrowly tailored class or group of rulemaking situations. 
This interpretation relies upon certain somewhat ambiguous lan- 
guage in the provision : "whe7i the agency for good cause finds 
(and incorporates the finding and a brief statement of reasons 
therefor in the rules issued)." It also relies upon the supposed 
intention of Congress to provide a means by which individual 
cases could be separately considered on their own merits, and 
an exemption granted only in those specific cases in which it was 
justified on one of the grounds stated. 

While the above argument has great merit and is a sound gen- 
eral rule by which to construe section 553(b) (B), it overlooks 
two points. First, it may be "impracticable, unnecessary, or con- 
trary to the public interest" to follow usual section 553 procedures 
in every single instance of a specific type of rulemaking under a 
particular statute, when each such instance is viewed in isolation. 
In those circumstances it seems a foolish waste to require re- 
petitive and redundant findings and full publication of those 
findings. As will be explained later, rulemaking setting the dis- 
count rate for the Federal Reserve System is an example of that 
kind of situation. ^'"^ 

Second, there are also situations where compliance with the 
procedures of section 553(b) -(c) is not "impracticable" or "con- 
trary to the public interest" as applied to any single instance 
of rulemaking on a given subject, but becomes so as to a whole 
class if those requirements must be followed for all such similar 
instances of rulemaking. For example, so many different rules of 
a particular type may have to be issued within a short time 
period that affording notice and an opportunity to participate in 
every such case would be practically impossible, would frustrate 
the proper performance of the agency's functions, or would cause 
other substantial deleterious consequences. The wage determina- 
tions made by the Department of Labor under the Davis-Bacon 



^'' See text accompanying note 185 infra. 



REC. 1(). APA RULEMAKING EXEMPTIONS 357 

and related acts provide an example of such a situation. Pro- 
cedures of the type specified in section 553 may not be "impracti- 
cable" or "contrary to the public interest" with respect to any 
one such determination viewed in isolation; but those procedures 
undoubtedly become so when they must be applied to all such 
determinations. 

As a result, the exemption contained in section 553(b) (B) 
should be read to allow an agency to make the requisite finding 
for a whole class of rulemaking. But this should only be per- 
mitted if the agency can either make that finding as to every 
single member of the class considered separately, or as to every 
single member of the class because it would be "impracticable" 
or "contrary to the public interest" to impose section 553 pro- 
cedures on all members. Of course, agencies must be required 
to draw their classes for this purpose as narrowly as possible in 
order to exclude no more under this exception than is absolutely 
justifiable in terms of the statutory criteria. Overbreadth of any 
kind in the drawing of such a class of rules should not be toler- 
ated. Consideration might also be given to shifting the burden of 
proof to the agency with respect to such group as opposed to 
individual case delineations, thus forcing the agency to justify 
its definition of a "class" of rulemaking sought to be excluded 
from usual procedures. Such a limitation, however, may not be 
necessary and may have some undesirable consequences. 

The grounds specified in section 553(b) (B) upon which an 
agency may dispense with the usual rulemaking procedures are 
stated in the alternative, so that any one of the three grounds 
listed is sufficient to invoke the exemption. ^^^ The first ground upon 
which the qualified exemption becomes available is when the 
notice and participation requirements of section 553 are found to 
be "impracticable." Webster defines the term as meaning, among 
other things, "infeasible," "impractical, unwise, imprudent." "" 
Earlier drafts of the APA would have made the exemption 
available when the public rulemaking procedures were "imprac- 
ticable because of unavoidable lack of time or other emer- 
gency," ^''^ but the qualifying language after "impracticable" was 
subsequently dropped. The Senate and House reports on the APA 
stated that "impracticable" means a situation "in which the due 
and required execution of the agency functions would be un- 



1^ Attorney Genekal's Manual, supra note 11, at 30. 

'''Webster's New International Dictionary 1136 (3rd ed. 1966). 

'^' S. Doc. 248, supra note 2, at 140, 148, 157. See also id. 181. The version at 181 reads, 
"impracticable because of unavoidable lack of time or other emergency affecting public safety 
or health." 



358 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

avoidably prevented by its undertaking public rulemaking pro- 
ceedings." ^-'^ 

The term "unnecessary," which is the second exemptive ground 
specified in section 553(b) (B), connotes something which is "not 
necessary : useless, needless." ^''^ The legislative history indicates 
that it must be unnecessary "so far as the public is concerned, 
as would be the case if a minor or merely technical amendment 
in which the public is not particularly interested were involved." ^^^ 
On this basis one court seems to have concluded that "unneces- 
sary" applies to situations in which an agency rule is "minor or 
emergency in character," ^'^- or " 'a routine determination,' 'in- 
significant in nature and impact,' and unimportant 'to the in- 
dustry and to the public' " ^'^^ 

Rulemaking is also exempted by section 553 (b(B) from ad- 
vance notice and public participation when adherence to those 
procedures would be "contrary to the public interest." According 
to the APA's legislative history, this phrase "supplements the 
terms 'impracticable' or 'unnecessary' ; it requires that public 
rulemaking procedures shall not prevent an agency from operat- 
ing and that, on the other hand, lack of public interest in rule- 
making warrants an agency to dispense with public procedure." ^^* 
The Attorney General's Manual takes the position that " 'public 
interest' connotes a situation in which the interest of the public 
would be defeated by any requirement of advance notice." ^''^ 

At some point during their legislative history all three terms — 
"impracticable," "unnecessary," and "contrary to the public in- 
terest" — were referred to as operating "only where facts and 
interests are such that notice and proceedings are impossible or 
manifestly unnecessary" ^"•^ and as exempting "situations of emer- 
gency or necessity." ^'"■' However, the weight of their legislative 
history, as well as their language, clearly establishes that these 
terms were not meant to be so narrowly limited. At the same 
time it must be remembered that these are qualified grounds 
for exemption and are not to be construed more broadly than 
the demands of sound government administration and wise public 



'^' /d. 200, 258. Accord, Attorney General's Manual, supra note 11, at 30. 

'«» Webster's New International Dictionary 2504 (3rd ed. 1966). 

''* S. Doc. No. 248, supra note 2, at 200, 258. See also Attorney General's Manual, supra 
note 11, at 31. 

"2 Texaco, Inc. v. FPC, 412 F.2d 740, 743 (3d Cir. 1969). 

"'/d. at 743 (citing National Motor Freight Traffic Ass'n v. United States, 268 F. Supp. 90, 
95-96 (D.D.C. 1967). 

1" S. Doc. No. 248, supra note 2, at 200, 258. 

165 Attorney General's Manual, supra note 11, at 31. 

>«« S. Doc. No. 248, supra note 2. at 358. 

"'M 200, 258. 



REC. 16. APA RULEMAKING EXEMPTIONS 359 

policy require. It is worth repeating that the section 553(b) (B) 
exemption is "not an 'escape' clause in the sense that an agency- 
has discretion to disregard its terms or its facts." '""' An agency 
can use this exemption only if it has "good cause" within the 
provisions of the Act. 

A more detailed description of how the section 553(b) (B) 
exemption might operate in practice will demonstrate that it 
could satisfactorily handle the problems resulting from a repeal 
of section 553(a)(2) — and do so on the basis of a rational 
accommodation between the need for public participation in rule- 
making on the one hand, and the need for efficient, effective, 
expeditious, and inexpensive government administration on the 
other. Although the terms "impracticable," "unnecessary," and 
"contrary to the public interest" overlap to some extent, an effort 
will be made, insofar as possible, to examine their applications 
separately. But it should be remembered that in light of the 
very close relationship between these terms, the following analy- 
sis of their applications should also be considered as partially 
overlapping. 

Consider the exemption for situations where public procedures 
are found to be "unnecessary." This could undoubtedly perform 
the function intended by the exception for "minor revisions and 
refinements of rules" found in several of the bills discussed earli- 
er, and probably more satisfactorily so because the existing term 
may be more narrowly tailored. For example, the "unnecessary" 
exemption seems to cover situations where a rule involved is in 
fact of such a minor nature, like the rule requiring government 
loan instruments to be signed in ink, that public procedures 
would be a predictable and indisputable waste. Also under this 
"unnecessary" exemption, public procedures may be dispensed 
with for rules announcing the exact penalty rates applicable to 
the marketing of certain commodities in excess of the farm- 
marketing quota. The Department of Agriculture's action in 
those cases only involves a mathematical computation, the statute 
specifying that the rates are to be a certain percentage of parity 
or support price of the commodity as of a particular date.^®^ 
Similarly, usual rulemaking procedures are also "unnecessary" 
for mere technical changes in regulations. If, for example, the 
statute citations contained in a regulation must be altered to 
conform to changes in the numbering of the United States Code, 
or regulations are rewritten or reorganized purely for style. 



"* Id. See text accompanying note 152. 

"» 1957 House Study, aupra note 51. at 26-27. 



360 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

with no substantive changes, public procedures are obviously 
"unnecessary." 

On the other hand, under this exemption agencies should not be 
permitted to decide lightly that public procedures are "unneces- 
sary." In Texaco, Inc. v. Federal Power Commission ^'° the Third 
Circuit Court of Appeals considered an FPC regulation which 
had been promulgated without resort to the public procedures of 
section 553(b) -(c). The regulation required natural gas compa- 
nies to pay a compound interest rate, for the first time, on all 
amounts refunded to their customers because of overcharges re- 
sulting from new rates subsequently found to be unjustified. After 
considering all of the Commission's arguments, the court held 
that the rule was invalid because of the failure to follow section 
553 (b)-(c) procedures in its promulgation. 

The court in Texaco explained that "the rule does not fall 
within the 'unnecessary' exception relied on by the Commission 
since it cannot be classified as either minor or emergency in 
character." ^"^ The court refused to accept the argument that the 
section 553 procedures were "unnecessary" because they found 
that "the compound rate would affect numerous jurisdictional 
gas companies and potentially involves large sums of money." "- 
The court also expressly rejected the Commission's contention 
that the procedures were "unnecessary" because the new rule im- 
posed no obligation on aff"ected parties that could not have been 
imposed on them by ad hoc adjudicatory orders in each case. 
"The crucial fact is that the Commission elected to proceed in the 
case by making a general rule and, when engaged in rulemaking, 
it must comply with the procedural requirements imposed on 
rulemaking by the Administrative Procedure Act, which it failed 
to do. . . ." "3 

By holding as it did, the court in the Texaco case seems to 
have taken the position that the ability of an agency to achieve 
the same result as a rule by another means, such as through ad 
hoc adjudication, does not make the requirements of section 553 
(b)-(c) "unnecessary" when the agency in fact elects to achieve 
that result through rulemaking. This is not the place to fully 
explore the wisdom of that result.^'* However, a number of general 



110 412 F.2d 740 (3d Cir. 1969). 
»" Id. at 743. 

"» Id. at 745. 

"*Cf. NLRB V. Wyman-Gordon Co., 394 U.S. 759 (1969) (holding an agency order issued 
to a party in the course of an adjudicatory proceeding valid and enforceable, even though the 
same requirement announced in the course of an adjudication as a prospective rule only would 
be void because it failed to follow the rulemaking requirements of § 553). See generally Com- 
ment, Wyman-Gordon and the Excelsior Rule, 117 U. Pa. L. Rev. 621 (1969). 



REC. 16. APA RULEMAKING EXEMPTIONS 361 

points are worth making here. The result in Texaco can be justified 
in light of the fact that the APA favors public participation in 
rulemaking in all cases except those where very good reasons 
preclude it; the fact that the rule was not minor in its effects, 
and had a large financial impact on many companies; ^" and the 
fact that the agency did make a conscious choice to proceed by 
rulemaking which would result in an order of general applicabil- 
ity rather than by an ad hoc order in each case.^'" On the other 
hand, one of the undesirable effects of this decision may be to 
discourage the use of general rules in favor of ad hoc adjudica- 
tion, a result which is usually contrary to the sound administra- 
tion of regulatory policies.'" 

The "unnecessary" exemption should not allow agencies to avoid 
section 553 procedures merely on the ground that a rule is 
"minor" or "unimportant" because it only has a small impact on 
a very limited segment of the public. It is wise to have well- 
informed decision-making and citizen-participation in govern- 
ment rulemaking which has a relatively small impact on limited 
segments of the public, as well as in those actions which have a 
great impact on large portions of the public. Consider the follow- 
ing case, for example., 

One congressional office got a host of complaints from people, not only 
in that area, but throughout the country, on an unimportant rule which 
an agency had made without any public notice or hearing, related to 
public property. It related to how many pounds of petrified wood you 
could take off the premises of a national reservation of some type. And 
this agency had thought — well, it is a terrible thing to lose all these 
hunks of stone, so they— within their own internal organization, they 
came up with one pound, or something like that. 

This provoked all this correspondence to Congress. 

So the congressional people involved went down to the agency . . . 
[which] said— "Oh, well, we realize we made a mistake, we will raise 
it to five pounds." So the congressmen went back and said we solved 
the problem. The agency said yes, very unimportant. 

Well, that provoked ten times more mail than came in the first time, 
because it turned out that five pounds just didn't qualify under the 
standards by which petrified wood is traded in the market of . . . 
collectors ... It has to be a bigger poundage. 

Well, the moral of that particular story was that this supposedly mi- 
nor rule . . . turned out to be important to a lot of people in this country, 
and the fact that the agency did not give public noice, and give the public 



"5 412 F.2d at 743 n.7. 

>'« Id. at 744 n.9. 

"'See United States v. Storer Broadcasting Co., 351 U.S. 192, 203 (1956) ; NLRB v. Ma- 
jestic Weaving Co., 355 F.2d 854, 860 (2d Cir. 1966). See also Auerbach, Should Administrative 
Agencies Perform Adjudicatory Functions?, 1959 Wis L. Rev. 95 ; Shapiro, The Choice of Huie- 
making or Adjudication in the Development of Administrative Policy. 78 Harv. L. Rev. S21 
(1965). 



362 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

a chance to express its opinion, caused a heck of a lot of trouble for an 
awful lot of people."' 

The "impracticable" exemption could adequately deal with 
a number of different situations in which a requirement of ad- 
vance notice of rulemaking and public participation therein would 
be unreasonable. In cases of emergency where a rule is needed 
immediately in order to avoid injury or frustration of a program's 
objectives, the usual section 553(b) -(c) procedures can be disre- 
garded because they are "impracticable." According to the At- 
torney General's Manual, for example, "the Civil Aeronautics 
Board may learn, from an accident investigation that certain 
rules concerning air safety should be issued or amended without 
delay ; with the safety of the traveling public at stake, the Board 
could find that notice and public rule-making procedures would 
be 'impracticable,' and issue its rules immediately." ^'^ Similarly, 
where haste is needed, safety rules applicable to trucks and rail- 
roads, and rules regarding the marking, packing, and handling 
of dangerous items like explosives on such carriers, must also be 
permitted to avoid the usual procedures set out in section 553 
(b)-(c) on the grounds that such procedures are "impractica- 
ble." 180 

The Department of Agriculture has properly stated that the 
same rationale is equally applicable when the Department must 
impose or modify animal or plant quarantines promptly to pre- 
vent the spread of diseases or insect pests; or when the Depart- 
ment makes orders under the Packers and Stockyards Act of 
1921 to continue temporary rate schedules previously authorized 
after notice and an opportunity to be heard, if prompt action is 
necessary to avoid a reversion to rates and charges that are un- 
realistic in light of existing economic conditions; or when the 
Department finds that last minute changes are necessary in acre- 
age allotments and marketing quota regulations under the Agri- 
cultural Adjustment Act of 1938, because farmers must know of 
such changes prior to planting.^'*^ To force adherence to the pro- 
cedures of section 553 in any of these situations would be "im- 
practicable" because time is of the essence. 

Consider also the situation presented in the case of Durkin v. 
Edwa7'd S. Wagner Co.^^- In a prior decision involving the same 



"* ABA Symposium on S.1336, Washington, D.C., Dec. 1, 1966, Transcript 110-11. 

179 Attorney General's Manual, supra note 11, at 30-31. 

''■* 1957 House Study, supra note 51, at 1769 (Interstate Commerce Commission). 

i"/d. 26-27. See also Dighton v. CoflFman, 178 F.Supp. 114 (E.D. 111. 1959), aff'd 279 
F.2d 497 (7th Cir. 1960). 

1*^=115 F. Supp. 118 (E.D.N.Y. 1953). aff'd per curiam sub nom. Mitchell v. Wagner Co., 
217 F.2d 303 (2d Cir. 1954), cert, denied. 348 U.S. 964 (1955). 



REC. Hi. APA RULEMAKING EXEMPTIONS 363 

parties, the court had held that particular workers were not 
covered bv certain regulations under the Fair Labor Standards 
Act. This holding was contrary to the interpretation and practice 
of the Administrator of the Wage and Hour Division, an inter- 
pretation known and relied upon by the industry involved. As 
an immediate response to this decision, and without resort to 
usual rulemaking procedures, the Adminstrator promulgated a 
rule which included those workers within the relevant regulations. 

When he issued the new rule, the Administrator stated that it 
would be "impracticable, unnecessary, or contrary to the public 
interest" to follow usual rulemaking procedures in the making of 
this "clarifying" regulation. " [immediately effective clarifica- 
tion of the regulations is essential in order to accomplish the 
intent of the present regulations to safeguard the wage standards 
in the industry, to eliminate the unfair competitive situation, and 
to provide for adequate enforcement of the home work restric- 
tions." ^^^ On the basis of this evidence, and the absence of any 
evidence to controvert it, the court held that the rule involved was 
properly treated as within the section 553(b) (B) exception.*^* 

The court's result seems justifiable because any delay in pro- 
mulgation of the rule would have encouraged employers to 
abandon their previous adherence to the Administrator's interpre- 
tation of the earlier rule until a new rule to the same effect was 
formally adopted. This would have hurt countless employees who 
had come to rely on the fruits of the prior interpretation. It also 
would have injured those employees who chose, despite their 
competitors' contrary action, to keep their wages at the levels 
demanded by the earlier interpretation of the Administrator dur- 
ing the period in which the new rule was being adopted with 
public procedures. 

Either the "impracticable" or "contrary to the public inter- 
est" exemption, or both, must be deemed to cover rulemaking relat- 
ing to the debt management functions of the Treasury when 
notice and public participation would result in frustration of the 
Department's operations in that regard, or in other undesirable 



"•' Id. at 122. 

'** Id. at 122-23. On appeal the court said: 

Judpre Galston has found that the defendant's operations fall within the amended regula- 
tions and that the regulations were properly promulgated under the Administrative Procedure 
Act, 5 U.S.C. § 1003(a) D.C.E.D.N.Y. 115 F. Supp. 118. We see no reason to overturn his 
well-reasoned conclusions. While there was no advance notice of the amendment, yet that 
was not necessary, both because of its nature as an "interpretive" rule and because of the 
Administrator's finding of "good cause" for immediate action, based upon the fact that 
other employers in general were complying with this interpretation of the Act and defendant 
had long known of the view held by the Administrator. 
217 F.2d at 304. 



364 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

consequences. Either of those exemptions could also cover rule- 
making such as that determining "discount rates established by 
Federal Reserve Banks, and changes in general requirements 
regarding reserves of member banks, maximum interest rates on 
time and savings deposits, or credit for purchasing or carrying 
securities." The delay involved in according prior notice and pub- 
lic participation in those cases would ordinarily "prevent the 
action from becoming effective as promptly as necessary" to 
meet current economic exigencies, thereby making such proce- 
dures "impracticable" under those circumstances. The delay in- 
volved in adherence to usual procedures might also "permit specu- 
lators or others to reap unfair profits or to interfere with the 
Board's action taken . . . ." ^^= The next exemption to be discussed 
focuses on these latter problems. 

An agency can ignore usual rulemaking procedures under sec- 
tion 553(b) (B) whenever advance notice would tend to defeat 
a rule's purpose because in such situations those procedures would 
certainly be "contrary to the public interest." ^^^ The function 
sought to be performed by the exemption found in one of the 
bills discussed earlier for "matters with respect to which notice 
of proposed rulemaking would seriously impair effectiveness of 
a rule," is adequately performed by the existing "contrary to the 
public interest" terminology. For example, the Securities and 
Exchange Commission "has often deemed it inadvisable to sub- 
mit a proposed regulatory rule to the industry because of the 
danger that certain companies might take advantage of the in- 
terim period to effect transactions which the rule is designed to 
prevent or control and thus escape the intended regulation of 
conduct altogether." ^^ 

The Department of Commerce has reported that "[i]n the ex- 
ercise of [its] priority and allocation functions [under the De- 
fense Production Act of 1950], speed in the issuance of orders 
and regulations is often essential as prior notice of proposed 
governmental action would tend to defeat the purpose intended 
to be accomplished thereby. For example, notice of intention to 
place certain materials under production control or to limit ac- 
quisition thereof might create panic buying in an effort to get 
the jump on the regulation and on competitors." ^^^ In such cases 
the Bureau of Defense Services Administration properly invoked 



'*M2 C.F.R. § 262.2(e) (1969). See also S. 518 Hearings, supra note 30, at 366-67. 
^^ See 19U1 Hearings, supra note 17, at 812. See also Attorney General's Manual, supra 
note 11, at 31. 

*" B. Schwartz, An Introduction to American Administrative Law 62 (1958). 
1** 1957 House Study, supra note 51, at 115. 



REC. IG. APA RULEMAKING EXEMPTIONS 365 

the section 553(b) (B) exemption on the pfrounds that adherence 
to usual procedures in that situation would be "contrary to the 
public interest." ^'''' Similarly, the Department of Interior rule plac- 
ing: a moratorium on applications respecting: the public lands, 
would also fit within the exception. 

There is also no reason why the "contrary to the public inter- 
est" language of section 553(b) (B) cannot be used satisfactorily 
to work an overt accommodation between the need for public 
rulemaking procedures on the one hand, and the need for inex- 
pensive, expeditious, effective, and efficient government adminis- 
tration on the other. The function performed by language like 
"occasion delay or expense disproportionate to the i)ublic inter- 
est," which appeared in one of the bills discussed previously, can 
easily be performed by balancing the relevant considerations 
under a standard such as "contrary to the public interest." 

The "contrary to the public interest" terminology should allow 
the Department of Labor an exemption for the wage determina- 
tions it makes under the Davis-Bacon and related acts. Because 
of the especially large number of such "rules" that the Depart- 
ment must continually make during a limited period, required 
adherence to usual rulemaking procedures in that situation would 
cause an unusually large delay and/or increase in costs of all 
kinds. These extraordinary deleterious consequences resulting 
from the peculiar facts of the administration of this program 
outweigh any positive good that might result from requiring 
adherence to normal rulemaking procedures. The existence of 
seemingly successful alternative procedures to provide interested 
persons with adequate notice of, and a chance to contribute views 
in relation to, those wage determinations eliminates any possibil- 
ity that the Department should have to adhere to section 553 
procedures in this situation. ^^° 



"» Id. 

^""S. 518 Hearings, supra note 30, at 92, 95 (statement of the AFL-CIO). In addition, the 
Solicitor of Labor stated: 

The actual wage determination procedure is initiated by the procurement agency, which 
submits its request for a finding of wage rates prevailing in the locality of the propose<l 
project for the various classes of laborers and mechanics whose employment is required. 

The request is usually made about thirty days before any advertisement of specifications 
or the beginning of negotiations, as the case may be. 

Where the information on hand as a result of the continuing program referred to is 
sufficient to make findings, a decision is made. 

If the information is not sufficient, a field survey is made. In the course of the survey, 
local labor organizations, contractors, contractors' groups and public agencies are contacted. 
Hearings may also be held in order to amplify further the record upon which findings are 
to be based. 

When the findings are made, and the wage determination is issued to the requesting 
agency, copies of the wage determination are promptly sent to labor organizations and 
contractor associations with the understanding that they will be distributed to any local 
affiliates which may have an interest in the wage determination. This is done in order to 



366 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

Similarly, the "contrary to the public interest" standard 
found in section 553(b) (B) should permit exemptions for other 
extraordinary situations. Where the delay and costs involved are 
in fact so very large, due to the special facts of the case, that they 
outvi^eight the strong public interests favoring adherence to usual 
rulemaking procedures, an exception could be allowed. More than 
just "any increase in cost or delay" will be necessary to justify 
such an exception under the "contrary to the public interest" 
standard. The facts will have to demonstrate that an atypically 
large delay or increase in cost will result from adherence to 
normal rulemaking procedures, and that the extraordinary delay 
or cost is not outweighed by the benefits of adherence to those 
usual procedures. Situations of this sort will be relatively 
few. Those increased costs and delays which are ordinarily to be 
expected are properly treated by the Act as an acceptable quid 
pro quo for the important benefits achieved by requiring advance 
notice and public participation under section 553. 

Section 553(d) (3) should perform the same function for sec- 
tion 553(d) as section 553(b) (B) performs for section 553(b)- 
(c). According to section 553(d) (3), an agency can dispense 
with the section 553(d) required publication or service of a sub- 
stantive rule at least thirty days before its effective date, when- 
ever the agency decides to do so "for good cause found and pub- 
lished with the rule." This "good cause" exemption should give 
agencies at least as much discretion to avoid the application of 
section 553(d) in appropriate cases as the "impracticable, un- 
necessary, or contrary to the public interest" exemption gives 
them to avoid the application of section 553(b) -(c). Indeed, 
the former may give agencies even more discretion than the latter 
because the guiding terms "impracticable, unnecessary, or con- 
trary to the public interest" are conspicuously absent from section 
553(d)(3). 

Nevertheless, in order to make the requirements of section 553 



afford interested persons an opportunity to present timely requests for changes in the 
wage determination upon the basis of any evidence that they may have. 

Interested persons may appeal for review of wage determinations by the Department's 
Wage Appeals Board, which is empowered to pass upon all questions of law and fact. 

Substantive changes may be made in wage determinations without exception up to the 
ten-day period before the opening of bids for the construction work. Thereafter, and 
until the award of the contract, a substantive change may be made only where the 
procurement agency finds that there is a reasonable time in which to notify the bidders of 
the change. 
Id. 240. 

In those cases in which the Department serves personal notice of the wage determinations 
on the parties "subject thereto," or those parties have notice thereof as provided by law, the 
Department can dispense with the usual advance notice and public participation requirements 
because of § 553(b), and need not even rely on a modified § 553(b) (B). See also text accom- 
panying note 203 infra. 



REC. 1(5. APA RULEMAKING EXEMPTIONS 367 

(d) meaninji:ful, the exemption from its terms should be construed 
to be as broad, but no broader, than section 553(b) (B). If that 
is so, the "good cause" required by section 553(d) (3) must, like 
the "good cause" required by section 553(b) (B), be predicated 
on a finding that adherence to usual procedures is "impracticable, 
unnecessary, or contrary to the public interest." The legislative 
history of the "good cause" exception in section 553(d) (3) sup- 
ports the conclusion that the two exemptions should be treated 
as congruent. The House Report on the APA states that : 

[This] exception— upon good cause found and published — is not an 
"escape clause" which may be exercised at will but requires legitimate 
grounds supported in law and fact by the required finding. Many 
rules . . . may be made operative in less than 30 days because of in- 
escapable or unavoidable limitations of time, because of the demonstrable 
urgency of the conditions they are designed to correct, and because the 
parties subject to them may during the usually protracted hearing and 
decision procedures anticipate the regulation.'" 

Previous discussion should demonstrate that if the section 553 
(a) (2) exemptions under consideration were eliminated, the 
exclusions found in section 553(b) (B) and section 553(d)(3) 
could adequately handle any peculiar problems created thereby. 
Where a rational balancing of the relevant interests would indi- 
cate the desirability of an exception from the requirements im- 
posed by section 553(b)-(d) for particular rulemaking, the above 
"good cause" exemptions could suffice to achieve the result. 

No special exemption is needed from the right to petition 
provision of section 553(e) if the subsection (a)(2) exclusions 
are repealed. Interested parties should always have the right to 
petition for the issuance, amendment, or repeal of a rule. As 
noted earlier, the only obligation which that right imposes on 
an agency is the duty to follow its own rules with respect to 
such petitions, and the duty to respond under section 555(e) by 
giving "[pjrompt notice ... of the denial in whole or in part 
of a . . . petition . . . accompanied by a brief statement of the 
grounds for denial." If the need arises, an agency may respond to a 
group of similar petitions as an entity. Consequently, no situa- 
tion involving one or more petitions for a rule relating to the 
subsection (a) (2) subjects would seem to require even a qualified 
exemption from section 553(e). Currently no exemption from the 
right to petition requirement is deemed necessary for any rule- 
making already subject to the terms of section 553. In light of the 



"' S. Doc. No. 248, supra note 2, at 260. See also id. 201 ; Buckeye Cablevision, Inc., v. 
F.C.C.. 387 F.2d 220, 228 n.34 (D.C. Cir. 1967). 



368 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

importance of that right, and the minor burden it imposes on 
agencies, this position seems fully justifiable. 

If the right to petition continues unhampered by any excep- 
tions even after the subsection (a) (2) exemptions are removed, 
an important salutary consequence will follow. In every case 
where usual public procedures are dispensed with prior to the 
promulgation of a rule because the qualified exemptions of sec- 
tion 553(b) (B) are applicable, interested parties will have an 
effective chance to express their views on that rule subsequent 
to its enactment. They can file a petition for the amendment, 
repeal, or modification of the rule in question, including a state- 
ment of their reasons therefor. The agency will then be obliged 
to respond, as section 555(c) requires, with "[p]rompt notice 
... of the denial in whole or in part of . . . [the] petition . . . 
accompanied by a brief statement of the grounds for denial," 
unless it aflfirms a prior denial or the denial is self-explanatory. 
It should be recalled that the previously discussed bills to re- 
form section 553 required initiation of public procedures within 
a stipulated period after an emergency rule was promulgated in 
order to continue its effectiveness. Such an approach has merit in 
assuring public participation subsequent to a rule's issuance in 
those cases in which it was impossible beforehand. The right to 
petition should provide some of the same protection. 

The section 553(b) (B) and section 553(d) (3) exemptions im- 
pose a special obligation of disclosure on agencies utilizing those 
provisions. An agency must incorporate in the rules issued without 
following usual procedures the necessary statement of "good 
cause" predicated upon a finding that adherence to section 
553(b) -(d) is "impracticable, unnecessary, or contrary to the 
public interest"; it must also include a brief statement of the 
reasons for that finding. In cases where the exemption is utilized 
based on a finding with respect to a whole class of cases, only 
one such full publication relating to the whole class should be re- 
quired. Rules in that class subsequently issued without resort 
to usual procedures would only need to refer to the prior full 
publication of findings and reasons, and give its citation. To be 
of value, the reasons listed in the rules as justification for the 
failure to follow usual procedures must, of course, be fairly 
specific. Declarations in the language of the Act will not satisfy 
this requirement and should be deemed inadequate under the 
statute. At the same time the required statement of reasons need 
not be so detailed as to be unduly onerous. 

The above disclosure obligation will have two salutary effects. 



REC. 16. APA RULEMAKING EXEMPTIONS 369 

First, such a requirement will force the agency to consider very 
carefully its reasons for each such action. Second, by requiring 
an official statement of the agency's reasons for using the ex- 
emption, judicial review of that action will be facilitated. If 
such action is challenged in a judicial proceeding, the court can 
test its validity against the reasons provided in the prior publica- 
tion. Having stated the reasons for their conduct in this regard 
both formally and publicly, agencies will presumably not be 
allowed to assert others as justifications if the ones originally given 
prove to be inadequate. This should keep agencies both thoughtful 
and honest in the use of this exemption. 

The survey prepared specially for this study asked all federal 
agencies the following question : 

Why are the several specific exemptions currently contained in § 553(b)- 
(e) insufficient to deal with any disadvantages that might be encountered 
by your department or agency if all of § 553(a) (l)-(2) was repealed? 
Among these specific exemptions just referred to is that contained in 
§ 553(b) (B) providing that public notice of rulemaking and participa- 
tion by interested persons in rulemaking is not required "when the agency 
for good cause finds (and incorporates the finding and a brief statement 
of reasons therefor in the rules issued) that notice and public procedure 
thereon are impracticable, unnecessary, or contrary to the public interest." 

Agencies making rules presently exempted by subsection (a) (2) 
from section 553 responded in various ways to this question. 
These responses, and the following discussion of section 553(b) 
(B), may also be considered applicable to the section 553(d) (3) 
exemption since, as noted earlier, the requirements of that ex- 
emption are probably congruent with those of section 553(b) (B). 
Some respondents to the above question insisted that the section 
553(b) (B) exemption was an insufficient substitute for subsec- 
tion (a) (2) because the latter is necessary as it is, and the former 
is not as broad as the latter.^-'- Responses of this sort are of little 
help in evaluating the impact that the proposed changes may 
have, and they in no way detract from the solution previously 
suggested. They amount to no more than an insistence that sec- 
tion 553(a) (2) is necessary, and that nothing less is acceptable, 
without any explanation why other existing exemptions, including 



'"= 1969 Survey, supra note 27 (responses of Atomic Energy Commission; Post Office; Forest 
Service and Soil Conservation Service, Department of Agriculture). For example, the Post 
Office stated: 

It is considered that the specific exemptions contained in Sec. 553(b) -(e) are not well 
adapted to serve as substitutes for the subject area exemptions. It is believed that the 
exemption stated in Sec. 553(a) [21 reflects a proper and Keneralized findiing that the 
provisions of Sec. 553(b) -(e) are not appropriate for rulemaking in these subject matter 
areas and that the reasons underlying this will continue despite repeal of Sec. 553(a) [2]. 



370 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

section 553(b) (B), are inadequate substitutes for the subject 
matter exemptions of subsection (a) (2) . 

A frequent objection to section 553(b) (B) as a substitute for 
section 553(a) (2) is that making the findings required by the 
former would constitute too great an administrative burden on 
the agencies. ^^^ For example, the Department of Defense stated 
that "admittedly, the exemption is a broad one in which DoD 
would rely in issuance of any highly significant rule. . . . But 
the scope and volume of substantive rulemaking in the Depart- 
ment makes impracticable compliance with the unwieldy require- 
ment for a 'finding and a brief statement of reasons' for the 
'good cause.' " ^^* In light of the fact that the statement of findings 
and reasons is only required in those cases in which the agency 
opts out of the usual procedures, and that it can be made for a 
whole class of rulemaking in the few instances where that can 
be justified on the basis of the special facts and circumstances 
discussed previously, this objection seems unsound. The burden 
involved here consists only in the agency setting down, in each 
situation where justified, the finding that public procedures are 
"impracticable, unnecessary, or contrary to the public interest," 
and a brief statement of the reasons why that is so. To some 
extent agencies should be doing that in any case — if they are 
in fact living up to their more general responsibilities to accord 
as much participation in rulemaking as possible, consistent with 
their other obligations. The burden, therefore, seems to be both 
of a kind and quantity that the agencies should be willing and 
able to bear in light of the attendant benefits. 

A number of responses to the above question gave another rea- 
son why current exemptions contained in section 553(b) -(e) 
are inadequate substitutes for the subject exemptions of section 
553(a)(2). It is said that the scope of section 553(b) (B) is 
unclear and uncertain. Reliance upon that exemption, therefore, 
would not clearly handle all the problems created by repeal of 
section 553(a) (2); and it would probably result in much litiga- 
tion as to the scope of the subsection (b) (B) exemption, causing 
undue delay in the execution of agency programs and the like.^®^ 
"Uncertainty about the scope of the exemption" and the fact 
that "such a finding [as is required by section 553(b) (B)] is 
subject to challenge in the courts making uncertain the validity 



"" 1969 Survey, supra note 27 (responses of Department of Defense; FHA Commodity 
Stabilization Division, Department of Agriculture; Veterans' Administration; Small Business 
Administration; Office of Economic Opportunity). 

'"* 1969 Survey, supra note 27. 

'*= 1969 Survey, supra note 27 (responses of Small Business Administration; REA, Depart- 
ment of Agriculture; Department of Commerce; Department of Defense). 



REC. 1<>. APA RULEMAKING EXEMPTIONS 371 

of any rule issued under this exemption" was noted. ''"^ The De- 
partment of Agriculture's Rural Electrification Administration 
responded that the attendant possibilities for delay could be too 
easily utilized by one who wanted to obstruct one of the agency's 
programs."' 

It is true that the terms "good cause" and "impracticable, un- 
necessary, or contrary to the public interest" are not as precise as 
those which categorically exempt all rulemaking "relating to 
. . . public property, loans, grants, benefits, or contracts." The 
former terms are more difficult to apply. They involve some bal- 
ancing because of the required special assessment of the facts 
in each case. Therefore, their application is not as obvious or 
indisputable as that of section 553 (a) (2) . 

Nevertheless, as previously noted, the language of section 
553(b) (B) can adequately deal with all of the problems created 
by a repeal of section 553(a) (2). It need not be as unclear as 
the opponents in this area claim. If section 553(a) (2) is repealed, 
a legislative history could also be created to clarify further the 
scope of section 553(b) (B). Moreover, litigation of the scope and 
proper applicability of "good cause" and "impracticable, un- 
necessary, or contrary to the public interest" is not apt to be any 
more endless or obstructive here than it is elsewhere. And in 
light of the above discussion, it is not in fact likely, in the over- 
whelming number of cases, to have any significant impact on 
the agencies' ability to perform their functions properly. Stare 
decisis should have a substantial effect within a brief time. It 
should also be noted that although wise and honest use of the 
section 553(b) (B) exemption by the relevant agencies will not 
forestall all litigation, it will forestall some. 

In the end, however, it must still be admitted that there re- 
mains a real difference in clarity between the applicability of 
section 553(a) (2) and section 553(b) (B), and that some delays 
may be caused by litigation involving the latter. But these con- 
sequences are a price worth paying for the largely increased 
scope of the guarantee of public participation in rulemaking in- 
volved. After all, no showing has been made that they will have 



'«" 1969 Survey, aupra note 27 (response of Department of Defense). 

""Just as the uncertainty of the scope of the other exemptions of Sec. 553(b)-(e) invites 
litigations which could be used ... to obstruct the proper functioning of the agency 
... so this good cause exemption could invite obstructive litigation. For example. Sec. 
553(b) (B) requires a brief sUtement of the reasons for finding the notice and public 
procedure impracticable, unnecessary or contrary to the publiic interest. The sufficiency 
of the agency's reasons might be attacked in a suit. Whether or not RE:A's action iis 
ultimately sustainetl, the litigation in the meantime could defeat the purpose of the REA loan. 
1969 Survey, supra note 27. 



372 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

any serious ill effects in the mass of cases. If the fear really is 
that agencies will have to be careful in utilizing this qualified 
exemption, and that their hands will be tied by it to some extent, 
they are right. Similarly, if the fear is that in particularly close 
cases, the form of this exemption will cause agencies to utilize 
normal rulemaking procedures rather than risk possible litigation 
resulting in invalidation of the rule,^^'' that too is correct. Both of 
these results, however, are acceptable in light of the importance 
of the policy favoring public participation in rulemaking. 

A number of very important agencies from the point of view 
of the section 553(a)(2) exclusions admitted that the conse- 
quences resulting from a repeal of those exemptions could be 
handled by the remaining exemptions contained in section 553(b)- 
(e). The Department of Health, Education and Welfare noted 
that "the several specific exemptions contained in section 553(b)- 
(e) are sufficient to deal with the bulk of disadvantages that 
might be encountered if section 553(a) (l)-(2) were repealed." ^^^ 
In light of those other specific exemptions, especially section 
553(b) (B), the Department of Transportation said that it "could 
live" with the repeal of the subsection (a) (2) exemptions under 
discussion and "would not object to [their] . . . repeal." -"° Sim- 
ilarly, the Department of Labor stated that the repeal of the 
exemptions relating to "public property, loans, grants, benefits, 
or contracts" would cause that agency "no undue hardship in 
view of the specific exemptions contained in section 553(b) 
(g) '> 201 j^ (jj(j express an exception, however, based on the as- 
sumption that its wage determinations problem might not be 
solved adequately by the latter exemption as it is now deemed to 
operate. Since the revised section 553(b) (B) proposed here would 
enable the Department to solve this problem for that whole class 
of rulemaking by one operation, their doubts should be assuaged. 

The same should be true of the Treasury Department. It ad- 
mitted that 



108 "pj^g Department of Agriculture's Farmers Home Administration feared that reliance 
solely upon the § 553(b) (B) exemption might discourage issuance of rules and needed changes 
in rules. See 1969 Survey, supra note 27. This consequence seems highly improbable. More 
likely is the consequence noted in the text above. 

•" 1969 Survey, supra note 27. See also the following responses to the 1969 Survey. The 
National Aeronautics and Space Administration stated: "On balance . . . NASA should not 
find itself greatly disadvantaged by a removal of [§ 553 (a)] . . . ." NASA went on to note 
that the exemptions presently contained in §§ 553(b)-(e), especially § 553(b) (B) "should 
be adequate to prevent unreasonable, costly and empty exercises in rulemaking procedures 
from resulting." The Office of Economic Opportunity admitted that "the good cause exemp- 
tion would of course serve as some protection against the undue formalism of the A. P. A. 
rulemaking procedures"; but it opposed repeal of § 553(a)(2). 

-'" 1969 Survey, supra note 27. The Department said, however, it would object to repeal of 
the "agency management and personnel" exemption of subsection (a)(2). 

2»i 1969 Survey, supra note 27. 



REC. l(i. APA RULEMAKING EXEMPTIONS 373 

if all of Section (a)(l)-(2) was repealed, in the preparation of reRU- 
lations which could not be published until announced by the Secretary, 
and in which speed and its requisite corollary secrecy are necessities, and 
advanced publicity and public participation opportunities, impossibilities, 
we recoprnize that we could resort to publication in our rule of a find- 
ing that notice and public procedures are contrary to the public interest. 

But the Department was still concerned because it thouj?ht "an 
amendment of the nature indicated by this question does not take 
into account the continuing functions of the Treasury in its debt 
management operations."-"- As noted earlier, to the extent that 
usual procedures are in fact "impracticable, unnecessary, or con- 
trary to the public interest" with respect to rulemaking involved 
in those functions, the Department has no cause for concern. 
However, to the extent that concern is a product of a desire for a 
broader exemption, the equities involved suggest it should not 
be honored. 

None of the objections stated to an "impracticable, unneces- 
sary, or contrary to the public interest" type solution to the prob- 
lem under consideration has sufficient merit to discourage utili- 
zation of that approach. Consequently, a repeal of the section 
553(a)(2) exemptions "relating to public property, loans, 
grants, benefits, or contracts" accompanied by a construction of 
section 553(b) (B) and section 553(d) (3) along the lines suggest- 
ed would be an excellent means by which to reconcile the con- 
flicting societal interests involved. The exemptive language should 
not and need not be so broadly construed as to render it a mean- 
ingless limit on agency discretion forestalling adequate public 
participation in rulemaking, nor so narrowly construed as to 
render it an ineffective tool to deal with the real problems which 
admittedly might be faced by certain agencies if section 553(a) 
(2) was repealed. 

As noted earlier, this kind of qualified exemption will remove 
from the requirements of the rulemaking section virtually all of 
those situations now used to justify the across-the-board un- 
qualified exceptions presently contained in section 553(a) (2) = 
Unlike the latter provision, however, the former has the advan- 
tage of excluding from the strictures of section 553(b) -(d) only 
those specific rulemaking situations where competing interests of 
a high order clearly outweigh the interests in public participation. 

Furthermore, repeal of the section 553(a)(2) exemptions in 
question will also be advantageous because the competing values 
involved will be more adequately accommodated in another way. 

-0- Id. 



374 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

Unlike the current unqualified exemption of subsection (a) (2) 
rulemaking from every provision of section 553, the solution pro- 
posed would only exempt particular instances of such rulemak- 
ing, v^^here essential, from the specific subsections whose applica- 
tion would be unreasonable in those instances. So, even if prior 
public participation under section 553(b) -(c) should be eliminat- 
ed in a particular case of rulemaking, the agency will still be 
required, as section 553 (e) unqualifiedly demands, to give persons 
a right to petition for the issuance, amendment, or repeal of a 
rule. As noted previously, exemption from that requirement seems 
never to be justified. 

One final point with respect to the scope of the statutory re- 
form proposed here deserves note. Rulemaking is defined by the 
APA as the process for formulating "agency statements of 
general or particular applicability and future effect designed to 
implement, interpret or prescribe law or policy . . . ." ^°^ The pro- 
cedures of section 553 are better adapted to dealing with rule- 
making of general applicability than to dealing with rulemaking 
of particular applicability. Therefore, requiring adherence to 
the procedures of section 553 in the case of the latter class of 
subsection (a) (2) rulemaking may create larger burdens and 
smaller benefits than requiring adherence to those procedures for 
similar rulemaking of general applicability. 

However, by using one of two exemptions, an agency can avoid 
the trouble of opening too wide the role of public participation 
in rulemaking of particular applicability. To the entent that it 
is more "impracticable, unnecessary, or contrary to the public 
interest" to follow normal procedures for subsection (a) (2) 
rulemaking of particular applicability than for such rulemaking 
of general applicability, the section 553(b) (B) and section 
553(d) (3) exemptions can adequately handle the problem. As a 
result, one may expect greater resort to the section 553(b) (B) 
and section 553(d) (3) exemptions for subsection (a) (2) rulemak- 
ing of particular applicability than for such rulemaking of gen- 
eral applicability. 

Furthermore, section 553(b) permits agencies to avoid prior 
publication of notice in the Federal Register if "persons subject 
thereto are named and either personally served or otherwise have 
actual notice thereof in accordance with law." This means that 
after the repeal of section 553(a) (2), agencies will still not be 
required to publish advance notice of such rulemaking of particu- 
lar applicability in the Federal Register if they only do what is 



'5 U.S.C. § 551(4) (Supp. IV. 1969) (emphasis added). 



REC. 16. APA RULEMAKING EXEMPTIONS 375 

fair in any case: give the persons "subject thereto" personal 
notice and "an opportunity to participate in the rulemaking 
through submission of written data, views, or arguments." This 
seems to be the result of a reconciliation of the language "persons 
subject thereto" in section 553(b) and "interested persons" in 
section 553(c) . 

To continue the section 553(a) (2) exclusion as applied to rule- 
making of particular applicability would mean that rules of this 
sort would be subject neither to the statutory provisions govern- 
ing rulemaking procedure nor to the statutory provisions govern- 
ing adjudicatory procedure. This result would be most unfortu- 
nate. Some clear statutory protection ought to be given affected 
parties in situations where agencies make rules of particular ap- 
plicability relating to "public property, loans, grants, benefits, or 
contracts." The particular persons involved have much at stake, 
and the public interest in assuring that the official decision-makers 
are adequately informed in such cases is great, even though 
not as great as in cases of rulemaking of general applicability. 
Consequently, until that time when the general definition of "rule" 
used in the APA is changed so that "rulemaking" of particular 
applicability is treated as adjudication, the procedural protec- 
tions of section 553 should be made applicable to all subsection 
(a) (2) regulation formation. The various exemptions now con- 
tained in section 553 will adequately deal with any special prob- 
lems that arise from application of that provision to such rule- 
making of particular applicability. 

VIII. Conclusion 

Serious proposals for the elimination of the section 553(a) (2) 
exemptions for rulemaking relating to "public property, loans, 
grants, benefits, or contracts" have been made since at least 
1955. The Task Force Report on Legal Services and Procedure of 
the Hoover Commission noted in that year that 

many rules governing proprietary matters, such as procedures respecting 
public property, loans [grants], benefits, and contracts, are of vital 
importance to the members of the public affected by them. Such rules 
often have a direct bearing upon private interests, and participation in 
the rulemaking process by those affected is appropriate and to be de- 
sired.^ 

The Task Force concluded that "proprietary functions may . . . 
be effectively executed by agencies with public participation in 
the rulemaking process" and, therefore, what is now section 553 



=<" Task Force Report, supra note 6, at 158-59. 



376 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

(a) (2) should be repealed. ^"^ It was convinced that "the require- 
ment of public participation [in those cases] does not subject 
departments and agencies to an unreasonable procedural bur- 
den." -°^ Since that time several bills have sought to accomplish 
the same result: elimination of section 553(a) (2) as it is pres- 
ently constituted. 

This study demonstrates that the 1955 Task Force Report of 
the Hoover Commission and the bills since introduced into Con- 
gress were correct. The unqualified exemptions from section 
553 for all rulemaking relating to "public property, loans, grants, 
benefits, or contracts" should be repealed. The reasons advanced 
to justify those exemptions are not sufficient. At most, those 
justifications dictate the need for a more narrowly tailored ex- 
emption from usual rulemaking proceedings than is currently 
found in section 553(a)(2). The existing "impracticable, un- 
necessary, or contrary to the public interest" provision found in 
section 553(b) (B) and the "good cause" exemption found in sec- 
tion 553(d) (3) provide such an exclusion from the requirements 
of section 553(b)-(d). They would work an adequate accommo- 
dation of the competing interests involved, carefully balancing the 
need for public participation against the need for effective, effi- 
cient, expeditious, and inexpensive government administration. 
And an exemption from the right to petition conferred by section 
553(e) seems no more necessary or justifiable for subsection (a) 
(2) rulemaking than for rulemaking already covered by section 
553. 

The solution proposed here to the difficulties arising from the 
repeal of section 553(a)(2) is bound to put some additional 
burden on the agencies who will have to implement it. But the 
burden involved in agency use of the section 553(b) (B) and sec- 
tion 553(d) (3) exemptions is not likely to be very large. Further- 
more, any administrative burden that is in fact likely to result 
from the proposed solution would seem clearly outweighed by the 
benefits obtained. Repeal of section 553(a) (2) will, after all, 
guarantee increased public participation in rulemaking of the 
kinds currently excluded from usual procedures by that provision. 

A discouraging discovery made in the course of this study 
has been that a number of agencies opposing modification of 
section 553(a) (2) do not seem to have restudied their position 
carefully and seriously during the last few years. Statements 
opposing repeal of these exemptions that were prepared as long 



^°^ld. 159. 
2"« Id. 160. 



REC. 16. APA RULEMAKING EXEMPTIONS 377 

as five, ten, or even thirteen years ago are still used by some 
agencies as the principal basis for articulating their current 
position on this subject. The language of a few such statements 
has sometimes not even been modified to reflect subsequent 
changes in the law, or obvious changes in circumstances, when 
they were reissued in light of a new inquiry on this subject. It 
is hoped that the present study can at the very least provoke 
those agencies who have opposed modification of section 553(a) 
(2) into conducting a serious and careful reconsideration of 
their position on the question. That reconsideration should result 
in this realization: repeal of the exemptions for rulemaking re- 
lating to "public property, loans, grants, benefits, or contracts" 
need not seriously disadvantage them in light of existing exemp- 
tions contained in other portions of section 553. 

In conclusion, it should be reiterated that the proposal made in 
this study would only affect the section 553(a)(2) exemptions 
for rulemaking relating to "public property, loans, grants, bene- 
fits, or contracts." The current proposal would not affect, in any 
way, the existing section 553(a)(1) exemption for rulemaking 
involving a "military or foreign affairs function," or the existing 
section 553(a) (2) exemption for rulemaking relating to "agency 
management or personnel." Similarly undisturbed would be the 
exemption from section 553(b) -(d) of all "interpretative rules" 
and "statements of policy" found in section 553(b) (A) and sec- 
tion 553(d) (2). The above exemptions, when combined with sec- 
tion 553(b) (B) and the "good cause" exemption found in section 
553(d) (3), should provide fully adequate leeway for all agencies 
to meet their responsibilities properly, even after the repeal of 
section 553 (a) (2). 



RECOMMENDATION NO. 17 

RECRUITMENT AND SELECTION OF HEARING EXAM- 
INERS; CONTINUING TRAINING FOR GOVERNMENT 
ATTORNEYS AND HEARING EXAMINERS; CREATION 
OF A CENTER FOR CONTINUING LEGAL EDUCATION 
IN GOVERNMENT 



RECOMMENDATION 

A. Recruitment and Selection of Hearing Examiners 

1. The Civil Service Commission should enlarge the base of 
recruitment and the number of qualified candidates available for 
appointment to hearing examiner positions by recognizing trial 
experience as one basis for qualification. 

2. The Civil Service Commission should depart experimentally 
from the selective certification system as now practiced in the 
appointment of hearing examiners. Instead, it should develop a 
system under which the number of candidates qualified for hear- 
ing examiner positions is enlarged through the use of a general 
register for all agencies, with additional credit for specific rele- 
vant professional experience or selective certification for those 
agencies which demonstrate to the Civil Service Commission's 
satisfaction a current need for personnel possessing a specific 
background. The purpose of this experiment should be to permit 
meaningful comparative evaluation with the system now in ef- 
fect, A report should be made to the Administrative Conference 
after 3 years of experience. 

To aid the Civil Service Commission in effectuating the ob- 
jective of this part of the recommendation, the Chairman of the 
Administrative Conference should appoint special committees 
from time to time to evaluate the standards of specific relevant 
professional experience proposed to the Civil Service Commis- 
sion by any agency as being required for its work. Present selec- 
tive certification agreements should continue until new stand- 
ards have been adopted by the Civil Service Commission. 

3. The Civil Service Commission should study and, if practi- 
cable, should institute an experimental intern program to supple- 
ment the direct appointment of hearing examiners from the reg- 
ister. Without finally deciding the issue, the Conference urges 
the Commission to consider anew whether successful interns 
should automatically be placed in hearing examiner positions. 

378 



REC. 17. GOVERNMENT ATTORNEYS 379 

4. The Veterans Preference Act should be amended to permit 
the selection of examiners for each vacancy from the top 10 avail- 
able persons then appearing on the register, determined on the 
basis of examination and ranking without reference to veterans 
preference. 

B. Continuing Training for Government Attorneys and 

Examiners 

1. Agencies employing attorneys and hearing examiners 
should encourage their participation in programs of continuing 
legal education. Budgets should include adequate funds for per- 
sonnel so that attorneys and examiners may be released for rea- 
sonable periods of time to accomplish added training. Agencies 
should take all suitable steps to assure wide knowledge of train- 
ing opportunities. 

2. Agencies should also explore ways in which they can sup- 
port the professional training activities of the Federal Trial Ex- 
aminers Conference, bar associations, foundations, the Civil 
Service Commission, law schools, the individual agencies with 
parallel legal interests, and other institutions offering appropriate 
training for attorneys and examiners. 

3. The feasibility of short-term exchange assignments of ex- 
perienced attorneys in higher grades among agencies should be 
considered, in order to enhance the insight and effectiveness of 
government lawyers by exposing them to varied aspects of legal 
problems with which they may deal. 

C. Creation of a Center for Continuing Legal Education 

in Government 

1. A center should be established in the Washington area for 
the continuing legal education of Government lawyers, hearing 
examiners, and private attorneys practicing before Government 
agencies. The center should also promote coordinated programs 
within the Government and with specialized segments of the 
organized bar; stimulate and engage in the preparation of man- 
uals, research materials, and other publications in support of 
such continuing legal education; and provide a mechanism for 
the exchange of information concerning professional problems of 
Government attorneys. The center, under the direction of law- 
yers, should be oriented toward applied legal problems. The Civil 
Service Commission should make available to it the benefit of the 
Commission's experience in establishing and operating Federal 



380 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

Executive institutes and centers. The Federal Administrative 
Justice Center proposed by the American Bar Association in a 
resolution adopted by the American Bar Association's House of 
Delegates in January 1969, as an example, would serve the pur- 
pose of the present recommendation. 

2. The establishment of the Center should not diminish each 
agency's present responsibility to provide continuing legal edu- 
cation for its own lawyers through "in-house" training programs, 
but the Center should support and assist all agencies in main- 
taining these programs at a high level of effectiveness. 



VIEWS OF THE COUNCIL ON THE RECOMMENDATION 
OF THE COMMITTEE ON PERSONNEL 



At its meeting on September 29, 1969, the Council of the Ad- 
ministrative Conference took the following action concerning 
proposed recommendations 1 through 4 of the Committee on Per- 
sonnel concerning a change in the title for Hearing Examiners. 

1. The Council objects to the name Administrative Chancellor 
as proposed in recommendation 2. The Council also objects to the 
name Administrative Trial Judge which has been proposed by 
the minority members of the Committee. If the name is to be 
changed, the Council feels that the name adopted should be one 
which does not have the disadvantages of the names proposed. 

2. Since in its view an acceptable title has not yet been pro- 
posed, the Council does not express an opinion on proposed Rec- 
ommendation 1. 

3. If it is determined to change the name of Hearing Exam- 
iners to an acceptable title, the Council is in agreement with 
proposed recommendations 3 and 4. 

Mr. Harold Russell, a member of the Council, wishes to be re- 
corded as in favor of proposed recommendations 1, 3, and 4 and 
in favor of the name "Administrative Trial Judge" for the posi- 
tion now named "Hearing Examiner." * 



* The proposed recommendations 1 through 4 failed of adoption. Matters referred to in the 
attached Committee report as Recommendations 5 through 14, and which were adopted, are 
incorporated as subparagraphs of Recommendation No. 17. 



REPORT OF THE COMMITTEE ON PERSONNEL IN 
SUPPORT OF RECOMMENDATION NO. 17 



Prepared by 

Robert E. Park 

Professor of Law 

George Washington University 



Introduction 
The Committee on Personnel has prepared recommendations 
for the Conference in four areas : 

(1) a change of title for section 11 Hearing Examiners; 

(2) changes in the examination and appointment proce- 
dures for Hearing Examiners ; 

(3) continuing legal education of Hearing Examiners and 
Government attorneys ; and 

(4) establishment of a center for continuing legal educa- 

These topics are not novel. The first three years have been sub- 
jected to extensive debate for a number of years and have been 
the subject of a variety of proposals, some of them runnmg back 
to 1962 and the recommendations of President Kennedys Ad- 
ministrative Conference, others to Hoover Commission recom- 
mendations, others to parallels in the Report of the Attorney 
General's Committee on Administrative Procedure m 1941 and 
beyond. The third topic raises proposals which have been tried 
in various forms in several departments and agencies and are 
offered to strengthen the potential value of these programs and 
to encourage their greater use throughout the Government. The 
idea of a center for continuing legal education of lawyers in- 
volved in the administrative process, which is embodied in the 
fourth proposal, has been the subject of extended study by the 
American Bar Association. The Committee recommendations are 
compatible with the detailed proposal of that organization. 

With respect to all of these matters the Committee informed 
itself through five days of public hearings in April 1969, supple- 
mentary statements and exhibits, a survey of departments and 
agencies in June 1969 which invited responses to specific pro- 

381 



382 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

posals, and numerous individual contacts with interested lawyers 
in and outside of Government. 

The third and fourth sets of proposals, although subject to 
some debate as to specific details, were broadly supported and 
minimally controversial. The first and second sets, however, are 
very controversial. The bulk of the Committee's time and' this 
report are devoted to these two topics. 

A. Change of Title of Hearing Examiners 
Recommendation 1 

That the title of presiding ofl^cers appointed pursuant to 
§ 11 of the Administrative Procedure Act (5 U.S.C. 3105) 
should be changed from Hearing Examiner to a title more 
clearly reflecting the unique status and responsibilities of 
these quasi-judicial ofl^cers. 

Recommendation 2 

That an appropriate title to accomplish the objectives of 
Recommendation 1 would be Administrative Chancellor. 

Recom/mendation 3 

That the Civil Service Commission effect this change of 
title. 

Recommendation Jf. 

That every department and agency employing such per- 
sons effect this change of title, as it is in the public interest 
that the same title be used throughout the Government. 

Why Change the Title of Hearing Examiners? 

The Committee was persuaded that support for a change of 
title to something more clearly reflecting the important position 
and function of these quasi-judicial ofllicers was overwhelming. 
Testimony heard in the public hearings and received in written 
form was almost exclusively in favor of such a change. There was 
no comparable agreement upon a substitute. 

The present title of Hearing Examiner is not readily under- 
stood by laymen. It does not suggest to lawyers not familiar with 
the agencies the significance given the findings and decisions of 
the presiding ofl^icer. It has been confused with and compromised 
by the extensive use of the title Examiner for a wide variety of 
inferior and clerical officers throughout the Federal and state 
Governments. Particularly in hearings such as those conducted 



REC. 17. GOVERNMENT ATTORNEYS 383 

by the National Labor Relations Board, where the credibility of 
witnesses and the full cooperation and respect of counsel and 
witnesses may be critical to the orderly and reliable conduct of 
the hearings, the title Hearing Examiner does not adequately 
suggest the serious character of the hearings. Attempts by agen- 
cies to individually dignify their hearings and to remedy this 
deficiency, by steps such as referring to hearing officers as Trial 
Examiners and referring to them in terms of the traditional 
courtesies and deferences of the courtroom, have not proven suf- 
ficient. Agencies, such as the Social Security Administration's Bu- 
reau of Hearings and Appeals, which deal directly with individ- 
ual members of the public, report that parties do not feel the 
assurance and confidence they should from the appellate charac- 
ter of their hearing because they tend to regard the Hearing 
Examiner as merely another bureaucrat in their extended dispute 
with the agency. Attorneys who lack familiarity with the regula- 
tory agencies also are confused and do not appreciate the inde- 
pendence of the Hearing Examiner. Further, since the title is 
ambiguous. Hearing Examiners often find it difficult to obtain 
the cooperation of Federal and state officials without lengthy 
explanations, as when obtaining the use of state courtrooms. And 
since the title is neither descriptive of function nor appropriate 
to the status of the office, it is suggested, potential applicants for 
Hearing Examiner appointments are not attracted to the office. 
A more appropriate title would, presumably, have a beneficial ef- 
fect upon the morale, recruitment and retention of the entire 
corps of Examiners. 

What Should the Title Be? 

Although the need for a title change is almost consensual, the 
choice of the title to be substituted has produced a great deal of 
controversy. The title proposal receiving the strongest support 
has been "Administrative Trial Judge." It has been sponsored by 
the Federal Trial Examiners Conference and by the Administra- 
tive Law Section of the American Bar Association, has been the 
subject of legislation introduced by Senator John G. Tower of 
Texas, is apparently unanimously supported by the Hearing Ex- 
aminers themselves, was the overwhelmingly favored proposal 
at the April public hearings of the Committee on Personnel, and 
has won the support or general acceptance of a number of agen- 
cies and departments, including the Federal Power Commission, 
the National Labor Relations Board, the Federal Maritime Com- 
mission, the Bureau of Hearings and Appeals of the Social Se- 



384 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

curity Administration, the Department of Housing and Urban 
Development, the Small Business Administration, the Post Office 
Department, the Department of the Army, and the Federal Com- 
munications Commission. 

Although some criticism of the term "trial" as non-descriptive 
of the function of Examiners in several agencies was received, 
the bulk of opposition was to the term "judge." It has been sug- 
gested that "judge" misdescribes the function of the Examiner 
and the hearing; that it will create confusion with members of 
the Federal Judiciary; that it suggests an independence of agency 
policy and of agency fact finding and decision powers that is 
quite inconsistent with the statutory objectives of the Congress; 
that it will induce unnecessary, undesirable and counterproduc- 
tive judicialization in the hearing process; that it is not needed 
and is inappropriately honorific for the office of Hearing Exam- 
iner; that it would be incongruous with the reviewing functions 
of agency review boards and of the Boards and Commissions 
themselves; that it would suggest that the Examiner's decision 
has the status of a judicial determination; that to apply it across 
the board to all Section 11 Examiners would not recognize the 
considerable range in grade from GS-13 to GS-16 of Examin- 
ers, nor in the responsibilities and public significance of their re- 
spective functions ; that the change is too drastic and that nothing 
indicates that the adoption of "judge" would accomplish the bene- 
fits claimed for it by the proponents ; and that it may, especially 
when coupled with the word "trial," suggest an excessively ad- 
versarial character and mislead counsel and interfere with the 
efficient conduct of the proceedings. Agencies opposed to the use 
of "judge" in the title, or critical thereof, included the Atomic 
Energy Commission, the Civil Aeronautics Board, the Depart- 
ment of Commerce (including the Office of Foreign Direct In- 
vestments, the General Counsel, and the Maritime Administra- 
tion), the Federal Trade Commission, the Interstate Commerce 
Commission, the Department of Health, Education and Welfare, 
the Department of Justice, the Department of Labor and the 
Department of the Treasury. The reader is reminded that these 
agencies, as well as those favoring "judge" above, have radically 
varying degrees of interest in the Examiner program and in the 
use of Examiners. A tally of proponents and opponents has no 
validity, but the scope of support and opposition has, and the 
agencies and departments are reported for that very limited pur- 
pose. A decision must be made upon the impact of the title change 
upon agency function, keeping in mind that some agencies are 



REC. 17. GOVERNMENT ATTORNEYS 385 

closer to the process than others and any decision in this regard 
will have a greater impact on them. Unfortunately, these do not 
divide decisively in one direction or the other. 

It is tempting to think that there must be some compromise 
title upon which most interested parties can agree. There does 
not appear to be one. Numerous suggestions have been offered, 
including: 

Adjudge Examiner 

Adminijudge Federal Trial Examiner 

Administrative Chancellor Hearing Officer 

Administrative Judge Judicial Officer 

Administrative Law Officer Presiding Officer 

Administrative Trial Judge United States Trial Examiner 

Administrative Trial Officer United States Trial Officer 

One of the reasons that compromises seem so unpromising is 
that the Examiners themselves and the agencies most strongly 
supporting them feel that the term "judge" is a critical element 
in any significant strengthening of the title, and that they fur- 
ther feel that a title change without the word "judge" will pre- 
clude further consideration of the matter for a number of years. 

The Committee on Personnel proposes the title Administrative 
Chancellor, believing that it indicates to the unfamiliar layman 
or attorney the essentially formal character of the proceeding, 
the independence and high status of the hearing officer, the dig- 
nity and deference to be extended the office, and the necessary 
distinctions to be made between administrative rulemaking and 
adjudication on the one hand and Federal judicial proceedings 
on the other. The Committee feels that this title is as appropriate 
as any offered it to describe the varied functions of the full 
range of examiners appointed under Section 11, and that it will 
be as acceptable to as broad a base of agencies utilizing Exam- 
iners as any title suggested to the Committee. 

Must the Title be Uniform as to All Agencies? 

With the agencies divided, it has been suggested that each 
agency be left to determine for itself whether a change in title 
is needed and what title is most appropriate for its hearing offi- 
cers. Arguing against this is the assumption that the uniform 
selection process, the sameness of status under Section 11 of the 
Administrative Procedure Act and the similarities of function 
would make such variations incongruous. Nevertheless, it is clear 
that some agencies feel a strong need for the change to "judge" 



386 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

and the question was carefully weighed before the general prin- 
ciple of the advantages of uniformity was adopted. 

It has been suggested to the Committee that there is consider- 
able variation in the functions of examiners. The far less formal 
hearings deciding claimants' rights by Social Security examiners 
are quite different from the complex economic proceeding of rate 
making at the Federal Power Commission and both differ sig- 
nificantly from the credibility determinations and fact finding re- 
sponsibilities of the National Labor Relations Board examiner. 
All three differ in turn from the fitness determinations of an 
examiner for the Federal Communications Commission in a li- 
censing renewal case. All of these differ from each other and from 
the work of examiners in other agencies but all share in broad 
general functions such as making evidentiary rulings, control- 
ling the development of testimony, dealing with counsel, making 
initial determinations of law and fact, etc. 

It has also been suggested to the Committee as noted above, 
since examiners range in grade from GS-13 to GS-16, that a 
single title as honorific as "judge" would bestow inappropriate 
formality and dignity upon proceedings that benefit from their 
informal character. 

The differences in duties, role and rank outlined above were 
weighed against the advantages of uniformity before the Com- 
mittee chose to make the title choice uniform. 

Under the present law the agencies may adopt any title they 
choose for internal administration, public convenience, law en- 
forcement and similar purposes. This conclusion is based upon 
an advisory letter sent the Federal Trial Examiner's Conference 
by the General Counsel of the U.S. Civil Service Commission on 
Feb. 5, 1969, which indicated that a uniform title established by 
the Civil Service Commission was necessary for purposes of per- 
sonnel administration, and for budgetary and fiscal matters, but 
that agencies individually might characterize their examiners as 
they chose for the other purposes noted. In neither case would 
legislation be needed to accomplish the change. 

In its June 16, 1969, survey inviting agency comment upon 
tentative proposals, the distinction made by the General Counsel 
of the U.S. Civil Service Commission was brought to the atten- 
tion of agencies and departments. This was done to determine 
how important the uniformity principle was thought to be, and 
whether agencies might prefer to have individual initiative in 
the matter of the title change. 

The following agencies indicated a preference for a uniform 



REC. 17. GOVERNMENT ATTORNEYS 387 

solution : Federal Maiitime Commission, Federal Trade Commis- 
sion, and Small Business Administration. 

The followinjr ag-encies supported the permissible change by 
individual agencies: Federal Power Commission and Housing 
and Urban Development. 

The reasons given in opposition were (1) that a risk of con- 
fusion would be created by variations in the styling of examiners, 
and (2) that the variations would be a source of rivalry in status 
between agencies and would create pressure on the agencies not 
using the most desired title to adopt it, especially if that title 
were to include "judge." The virtues of uniformity were not ex- 
plained beyond this. A limited variation was proposed by the 
consultant. This would be to adopt a common title for all exam- 
iners for budgetary and examination purposes. This would be 
accomplished by the Civil Service Commission. Then, agencies 
employing those in grade GS-16 would be permitted to experi- 
ment with "Administrative Trial Judge" or other titles and 
would thereby obtain a valuable experiential basis for evaluat- 
ing, broadening or abandoning the reform. Part of the survey 
response of the I.C.C. was especially relevant to this proposal : 

We would also like to point out that there is a great difference in the 
work of hearing examiners in different agencies. Also, the necessary de- 
gree of legal and administrative knowledge and training is so varying in 
different agencies that we do not believe a "broad brush" grant of the 
title of Judge should be so generally applied, indicating equal Judge sta- 
tus, to all the hundreds of hearing examiners who would be included. We 
have heard no sound rebuttal of this point. It appears, therefore, that 
the major, and perhaps the only, reason for asking for the change of 
title to Judge, for all hearing examiners, regardless of the great range 
of difference in the size, importance, and type of cases and procedures 
handled within the full list of agencies affected, is to gain the broadest 
possible support — a strength in numbers, united front approach, so to 
speak. 

Additionally, the ICC does not believe the ICC Commissioners should 
be asked to take a position regarding the titles of staff personnel of other 
governmental units; nor should members of other such units be asked to 
vote on title designations for the ICC staff. 

Thus, the consultant's proposal was one of uniform title for 
Civil Service Commission purposes and of an "individual agency 
option" on selection of title for GS-16 Examiners as an experi- 
ment to determine the advantages of title changes. The proposal 
was rejected by the Committee, because it would permit the use 
of the title "judge" when this was thought inappropriate and 
because it would introduce the possibility of a variety of titles 
confusing to the bar and public, stimulating rivalry among agen- 



388 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

cies in bidding for Examiner favor. 

The use of various titles by individual agencies, or two titles 
among all agencies, would not appear to interfere with the use 
of a single title for examination and personnel purposes by the 
U.S. Civil Service Commission. The Commission did not respond 
to this item of the survey, but the General Counsel's letter noted 
above does not suggest that an agency by agency change would 
interfere with the Commission's responsibilities. Since the en- 
actment of the Act, agencies have used various titles, e.g., Trial 
Examiners at the NLRB ; Examiners of Inheritance in the De- 
partment of Interior ; and, earlier. Referees in the Social Security 
Administration. The letter did question the feasibility of accom- 
plishing a comprehensive change on an agency by agency basis. 

The Committee adopted the recommendation that every de- 
partment and agency effect the change of title, as it is presumed 
to be in the public interest that the same title be used through- 
out the Government. Although the law will still permit agencies 
to adopt individual titles for the limited purposes noted above, 
the thrust of the recommendation will be to prevent such experi- 
mentation by individual agencies. This fourth recommendation 
is thus separable from the first three and is designed solely to 
assure uniformity in the styling of examiners. It is not essen- 
tial to the accomplishment of the title change, as such, but is the 
recommendation of the Committee as a policy matter. 

Will the Title Change Affect Examiner Subordination? 

Some agencies expressed concern lest the title change subtly 
affect the relationship of the Boards and Commissions or execu- 
tive officers of departments and the subordinate examiners. This 
was clearly not the intention of those proposing the title change. 
In its June 16, 1969, survey, a Committee proposal dealt with 
this matter explicitly : 

That this change should be accomplished in such manner that it will not 
affect the concept of examiner independence, the subordination of examin- 
ers to agency powers as provided in 5 U.S.C. 557(b), and the duty of 
examiners to comply with reasonable and proper directions of their 
respective departments or agencies in matters of administration. 

After considering the responses and the law, it was the feel- 
ing of the Committee that this was very clearly the case and 
that neither the procedure proposed for accomplishing the 
change of title nor the change of title itself could modify these 
relationships. Hence, the Committee chose to drop this recom- 
mendation altogether. 



REC. 17. GOVERNMENT ATTORNEYS 389 

Are Future Title Changes Barred? 

The Committee repeatedly heard the argument from those 
favoring "judge" that the adoption of any substitute would ef- 
fectively bar consideration of that title for a number of years. 
This is not the Committee's intention. The Committee, reacting 
to the clear division of opinion among agencies as to the suit- 
ability of the title "judge" chose what it regards as an equally 
honorific title, and one to which such strong adverse reaction 
was not received. It recognizes, however, that in practice the ad- 
vantages claimed for a title change may not be realized and that 
experience with Administrative Chancellor may eventually lead 
to a renewal of the debate. The Committee notes this in simple 
candor. It does not seek to prejudice the consideration of any 
proposal based upon additional experience and reflection in the 
future. 

How Will Administrative Chancellor Be Received? 

In its survey of June 16, 1969, Administrative Chancellor was 
one of three titles offered agencies to replace the present title of 
Hearing Examiner. 

It was criticized by three agencies as being susceptible of con- 
fusion with the officers of the Judicial branch and by one as mis- 
leading as to function, leading to confusion with religious or 
educational institutions or with courts of probate or equity. It 
was supported explicitly by only one, although several others in- 
dicated that it would be acceptable to them. 

The debate as to title change has been so thoroughly polar- 
ized by the proposal of "judge" that it is difficult to predict with 
confidence the reception Administrative Chancellor will have. 
Its historical associations with the system of justice of English 
speaking peoples, its strong associations with high station, re- 
sponsibilities and independence in all contexts, and its specific 
tie to the regulatory process through the addition of "adminis- 
trative" would seem to make it an attractive replacement for 
Hearing Examiner. 

B. Recruitment and Selection of Examiners 
Recommendation 5 

That the Civil Service Commission enlarge the base of 
recruitment and the number of qualified candidates avail- 
able for appointment to hearing examiner positions through 
recognition of trial experience as one basis for qualification. 



390 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES 

Recommendation 6 

That the Civil Service Commission on an experimental 
basis amend the selective certification system as now^ prac- 
ticed in the appointment of hearing examiners and provide 
in lieu thereof a system whereby the number of qualified 
candidates for appointment to hearing examiner positions 
would be enlarged through the use of a general register for 
departments and agencies generally, with the proviso for 
additional credit for specific relevant professional experience 
or selective certification for departments and agencies 
which justify a need on a current basis for such specific 
relevant professional experience to the Civil Service Com- 
mission in order to permit a meaningful comparative evalu- 
ation of the system currently in effect, a report to be made 
to the Administrative Conference after three years of 
experience. 

Recommendation 7 

That to effectuate the objectives of Recommendation 6 
the chairman of the Administrative Conference appoint spe- 
cial committees from time to time to evaluate the standards 
of specific relevant professional experience proposed to the 
Civil Service Commission by any department or agency as 
justifying experience, the present selective certification 
agreements to serve until the new standards are adopted by 
the Civil Service Commission. 

Recommendation 8 
That an intern program on an experimental basis to sup- 
plement the direct appointment of examiners is recom- 
mended to the Civil Service Commission for immediate study 
and for adoption if practicable in the judgement of the 
Commission. 

Recommendation 9 
That the Veterans Preference Act be amended to permit 
the selection of examiners for each vacancy from the top 
ten available persons appearing on the register, preserving 
examination grades and ranking to facilitate selection and 
eliminating Veterans Preference Points (5 to 10) . 

Why Consider the Selection Procedure? 
For a number of years an extensive debate has raged among 
those most interested in the examiner program as to whether 
the recruitment and selection procedures were producing the op- 



REC. 17. GOVERNMENT ATTORNEYS 391 

timum quantity and quality of candidates and appointees. Nu- 
merous issues have been raised in this debate, such as whether 
sufficient publicity has been ^nven nationwide to the number of 
positions, to the perquisites of examiners and to the examina- 
tion procedures; the impact upon potential attorney-applicants 
of the administrative law requirements; the reliance upon confi- 
dential inquiries of associates of applicants with inescapably 
varying subjective factors of scoring; the burdensome character 
and extent of materials and information required of the candi- 
date for examination purposes; the allegedly partisan role of 
some members of the personal interview panels; and the difficul- 
ties associated with obtaining a reevaluation and reranking once 
the examination has been passed successfully. All of these ques- 
tions, however, have lacked the degree of controversy attached 
to the two general questions of most far-reac